How the Memory Chip Shortage Is Reshaping Smartphones Through 2028

The company’s advantage comes from a highly integrated supply chain and a mature distribution network. That combination can give Samsung more flexibility than brands that rely more heavily on external component purchasing: it can manage product allocations, protect key channels and adjust its portfolio as memory costs rise.

Samsung also spans a wide range of price tiers, while maintaining a meaningful premium business. That breadth allows it to defend volume in multiple segments, even as the cheapest phones become difficult to produce profitably. Counterpoint expects premium-oriented Samsung and Apple to experience a more limited impact than brands with heavier exposure to low-end devices.

This is a forecast, not a guaranteed result. Samsung previously led the market in some quarters and Apple led the first quarter of 2026, illustrating how launch timing and regional performance can change the ranking. The annual crown will depend on whether Samsung can sustain supply and whether Apple’s premium sales continue to offset a smaller unit market.

Apple can absorb more of the shock

Apple is exposed to the same industry-wide memory inflation, but its business model gives it more room to manage the impact. Its premium customer base and higher margins make it easier to absorb some bill-of-materials increases or delay passing them fully to consumers. Counterpoint reported that Apple kept pricing broadly stable in the second quarter while other manufacturers raised prices.

That pricing resilience matters because the market is separating into two outcomes: premium buyers are more capable of tolerating higher prices, while budget buyers are more likely to postpone a purchase or choose a lower specification. Global smartphone revenue still grew 7% year over year in Q2 2026 despite the shipment decline, underscoring how premiumization can support revenue even when unit sales fall.

Apple’s strength therefore does not necessarily mean shipment growth across every period. It means the company can protect revenue, customer demand and market share more effectively than manufacturers dependent on high volumes of inexpensive phones.

Huawei may be more resilient than other Chinese brands

Huawei is another relative exception in the Chinese market. Counterpoint’s earlier 2026 outlook identified Huawei as the only Chinese brand expected to grow shipments, while describing Apple and Samsung as the most insulated major manufacturers.

The broader pattern is clear: brands with stronger premium positioning or more controlled supply arrangements are better placed to navigate a memory shortage than brands whose growth depends heavily on entry-level and midrange volume. Huawei’s resilience should still be treated as forecast-dependent, particularly because conditions differ substantially between China and overseas markets.

Budget phones face the steepest declines

The low end is where the shortage becomes most damaging. Memory represents a larger proportion of the bill of materials for inexpensive phones, so a sharp component-price increase leaves manufacturers with fewer ways to protect margins. At the same time, buyers in price-sensitive markets have less ability to absorb higher retail prices.

Counterpoint says the share of phones priced at $99 or below is declining much faster than the overall market, while the sub-$150 segment is especially vulnerable. Its forecast also points to a more than 30% decline in entry-level shipments in 2026.

Manufacturers have four basic responses:

• raise prices;
• reduce RAM or storage configurations;
• remove some entry-level models; or
• accept lower shipments and wait for supply conditions to improve.

Each option makes the cheapest part of the market less attractive. Over time, that can accelerate consolidation, lengthen replacement cycles and leave consumers with fewer genuinely low-cost choices.

Transsion, Xiaomi and HONOR were identified as particularly exposed in Counterpoint’s earlier outlook. In Q2, Xiaomi, OPPO and vivo recorded the steepest declines among the top five manufacturers, reflecting their greater exposure to memory-sensitive entry and mid-tier price bands.

Premiumization is becoming a defensive strategy

Xiaomi, vivo, HONOR and OPPO are responding by moving their portfolios upward. Premiumization in this context does not simply mean launching more expensive phones; it means relying less on low-margin entry devices, concentrating resources on upper-midrange and premium models, and becoming more selective about markets, channels and product launches.

The strategy is financially logical. A premium phone has more room to absorb higher memory costs, and a smaller number of better-supported models can be easier to supply than a sprawling entry-level portfolio. But it also creates a trade-off: manufacturers may improve their product mix while losing unit volume and reach among price-sensitive buyers.

Early market data shows the pressure behind that shift. Xiaomi, OPPO and vivo suffered the largest declines among the leading brands in Q2, while India also recorded year-over-year shipment declines for vivo, realme, Xiaomi and OPPO.

Regional markets are splitting along price lines

The memory crunch is affecting regions differently because premium penetration, financing and brand mix vary by market.

Latin America

Latin American smartphone shipments fell 10% year over year in Q2 2026. The decline followed inventory buildup in the first quarter, when vendors prepared for expected price increases, followed by a pullback. Samsung and Apple were the notable large-brand exceptions: Samsung grew 6% and Apple grew 5% in the quarter.

Europe

European shipments also fell 10% year over year, reaching 35 million units—the region’s lowest second-quarter total since Q2 2023. Western Europe held up better because of stronger premium demand, with Apple performing particularly well and Samsung recording marginal growth. Eastern Europe, which relies more heavily on lower-end Chinese devices, was more exposed to the squeeze.

The regional lesson is consistent with the global one: markets with more premium buyers and stronger financing options can absorb component inflation better, while budget-heavy markets feel the volume impact first.

Why AI phones and a foldable iPhone will not create a broad supercycle

AI features may help manufacturers differentiate premium phones, but they do not solve the underlying supply problem. If memory is scarce or prohibitively expensive, adding more memory-intensive features can increase costs rather than create enough affordable supply to lift the entire market.

A foldable iPhone could expand Apple’s premium opportunity, but a high-priced foldable would be more likely to improve Apple’s product mix than to trigger a market-wide shipment boom. The same constraint applies across the industry: premium innovation can shift who captures value, but it cannot by itself restore lost entry-level volume.

That is why the central variables for 2026 and 2027 are memory allocation, contract pricing, availability and each manufacturer’s purchasing power—not simply consumer interest in new features. Counterpoint has attributed the crisis to capacity being redirected toward AI-focused high-bandwidth memory and server DRAM, while forecasting major increases in smartphone memory costs.

What to expect through 2028

The most likely near-term path is a smaller and more concentrated smartphone market:

• 2026: shipments fall roughly 14% as memory shortages and higher prices hit the market; Samsung has a credible chance to retake the annual shipment lead from Apple.
• 2027: supply pressure continues, keeping entry-level devices and volume-focused Chinese brands under strain.
• 2028: a broader recovery becomes more plausible if memory supply normalizes and deferred replacement demand returns. Counterpoint’s SoC outlook places recovery around early 2028, while other forecasts describe easing later in 2027 or beyond.

The caveat is that these are moving forecasts. Earlier Counterpoint projections were materially less pessimistic before the memory crisis intensified: a December 2025 estimate called for a 2.1% decline, compared with later forecasts near 14%. That revision shows how quickly supply conditions can change the market outlook.

For consumers, the practical result may be higher prices, fewer low-cost models and longer upgrade cycles. For manufacturers, access to memory and the ability to protect profitable products will matter more than having the broadest catalog. And for Samsung and Apple, a shrinking market may still produce share gains—not because the shortage is good for the industry, but because it rewards scale, premium mix and supply-chain resilience.