Global smartphone chipset shipments fell 15 percent in the first half of 2026 as memory chip prices surged over 300 percent, forcing manufacturers to cut production and manage inventories.
The global smartphone industry is facing severe supply chain pressures as soaring memory costs squeeze device manufacturers and dampen component shipments. Worldwide system-on-chip shipments declined during the first half of the year, driven by a combination of steep component price increases, longer consumer replacement cycles, and cautious inventory management, according to preliminary figures published by Counterpoint Research.
Qualcomm and MediaTek Face Steep Declines While Apple and Unisoc Gain Share
The downturn hit the industry’s largest chipset suppliers the hardest. Shipments from MediaTek and Qualcomm each dropped more than 25 percent in the first half of the year compared to the same period in 2025. Qualcomm faced limited growth in the premium segment after the Samsung Galaxy S26 series adopted both the Snapdragon 8 Elite Gen 5 and Samsung’s own Exynos 2600 processors, diverging from previous generations that relied exclusively on Qualcomm hardware. Sluggish sales of the Xiaomi 17 series also weighed down Qualcomm’s shipments.
MediaTek experienced acute declines in the low-cost 5G and entry-level markets, though its flagship Dimensity 9500 series performed well following design wins with brands including Oppo, Vivo, Poco, and Redmi. In contrast, Apple, Unisoc, and Samsung increased their SoC shipments. Apple expanded its market share four percentage points, driven by sustained demand for the iPhone 17 series and its corresponding A19 and A19 Pro chipsets. Unisoc grew its presence by supplying 4G platforms for budget devices and expanding partnerships with Xiaomi brands like Poco and Redmi.
Memory Prices Surge Over 300 Percent and Outpace Processor Costs
The root of the manufacturing slowdown stems from component inflation. Smartphone memory prices surged more than 300 percent in the second quarter compared to the previous year. As original equipment manufacturers scrambled to secure long-term memory supply contracts, production costs became overwhelmingly dictated by memory prices rather than hardware specification upgrades.
The magnitude of the price shift pushed memory costs above processor costs across every smartphone price segment. This dynamic exposed entry-level and mid-range devices to severe margin compression, as manufacturers lacked the pricing room to absorb simultaneous surges in processor, memory, and storage expenses.
Generative AI Demand Shines Amid General Shipment Slump
Despite the broader market contraction, features powered by artificial intelligence provided a distinct counterweight. Shipments of processors supporting generative AI features grew 24 percent year-on-year, propelled by consumer demand for AI capabilities and a continuous industry trend toward premiumization.
Apple's market share in the first half of this year rose 4 percentage points from a year earlier, driven by the strong performance of the iPhone 17 series,
senior analyst Shivani Parashar said. For Qualcomm, growth in the premium segment was limited as the Samsung Galaxy S26 series, unlike previous generations, adopted both the Snapdragon 8 Elite Gen 5 and Samsung's own Exynos 2600.
Shivani Parashar, senior analyst at Counterpoint Research
Parashar noted that while premium models maintained momentum through advanced features, growth in the upper tier remained constrained for specific suppliers due to shifting chipset adoption strategies by major smartphone brands.
Full-Year Projections and Retail Price Pressures Ahead
The cost pressures show little sign of immediate relief. Qualcomm reportedly notified customers of plans to raise chip prices by double-digit percentages on products shipped after September 1, passing along higher manufacturing and supplier costs to device makers.
Market analysts project that global smartphone SoC shipments will fall 14 percent across the full year, with entry-level processor shipments expected to drop by more than 30 percent. With memory supply not anticipated to normalize before the second half of 2027, industry forecasts suggest retail device prices may climb further, with global market research indicating upcoming flagship models like the iPhone 18 Pro Max could see retail price increases.
