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The global smartphone market is heading into a period of structural upheaval, with average device prices climbing sharply even as overall shipment volumes fall, according to new research from Omdia.
The research firm’s latest forecast projects global smartphone shipments will contract by 12.2 per cent year-on-year in 2026, dropping to 1,093 million units. That represents a decline of 152 million units compared with 2025.
Yet despite the fall in volumes, the total market value is projected to grow by 6.1 per cent year-on-year over the same period, as vendors shift their focus from moving large quantities of low-cost handsets to selling fewer, higher-margin devices.
Rising prices across the board
The divergence between shipment volume and market value is being driven by a sharp rise in retail pricing.
The global smartphone average selling price (ASP) is forecast to climb from $467 in 2025 to $565 in 2026. The 21 per cent jump – equivalent to $98 – represents the largest annual increase in both growth rate and dollar terms the industry has recorded.
The pricing shift reflects margin pressures running through the supply chain. Average DRAM and NAND flash memory prices rose by more than 80 per cent quarter-on-quarter in the first quarter of 2026, with further increases already recorded in the second quarter.
While memory price increases are expected to ease to single-digit growth rates in the second half of the year, component costs will remain elevated, forcing vendors to pass some of those costs on to consumers.
Component costs driving vendor strategy
Jusy Hong, Senior Research Manager at Omdia, described the current environment as one of considerable disruption for smartphone makers.
“The smartphone industry is currently going through a period of significant disruption, as vendors work to manage short-term component cost pressures as effectively as possible,” Hong explained.
“Some vendors are gaining early-mover advantages by increasing component inventories to minimise the impact of future price hikes. Once the DRAM and NAND pricing starts to stabilise and plateau at a new level, the market is expected to enter a phase of stabilisation, where the focus will shift back to other strategic priorities. This transition is expected towards the second half of 2027.”
Hong added that many in the industry are looking ahead to an anticipated readjustment phase.
“Many industry players will be waiting for the readjustment phase, when component prices start to move downwards. At this stage, vendors with leaner structures will be better positioned to benefit from price declines, and excess inventory could become a major hurdle. The transition to a readjustment phase is currently anticipated in early 2028, driven by expected increases in supply capacity. Short-term ease could arrive earlier, depending on how AI datacenter demand develops.”
Emerging markets to bear the brunt
To protect margins, global vendors are actively scaling back their low-end product lines and increasing the share of mid-to-high-end smartphones in their portfolios.
The effects of this strategic shift will not be felt evenly across regions.
Demand is expected to fall heavily in Africa, the Middle East and Latin America, where markets rely on low-end devices and are particularly sensitive to price increases. Premium-heavy developed markets are expected to prove more resilient, with milder shipment declines.
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Almost every major smartphone brand – apart from Apple – has raised retail prices for new-generation products to offset higher manufacturing costs.
Ecosystem play becomes critical
Runar Bjorhovde, Principal Analyst for Smartphones at Omdia, pointed to the growing importance of broader business models in navigating the downturn.
“Vendors are also increasingly relying on wider business models and portfolios to strengthen operational resilience,” Bjorhovde outlined. “Vendors and regions with a high dependence on budget smartphones as their primary customer engagement will be particularly exposed.”
“The strongest position will be held by vendors that can capture additional high-value and high-margin streams from each user. This will typically include cross-selling other ecosystem devices, upselling services and subscriptions that increase the lifetime user value and expanding opportunities to monetise the installed base.”
Recovery not expected until 2028
Looking further ahead, Omdia forecasts that the global smartphone market contraction will extend into 2027, although the rate of decline is expected to slow to 0.9 per cent.
Even as memory prices are projected to begin correcting in 2027, the baseline cost of manufacturing sub-$100 smartphones is expected to remain too high to support meaningful reductions in end-user pricing.
A volume recovery for the industry is therefore not expected to begin until 2028.
Top global smartphone vendors are expected to remain conservative about expanding entry-level lineups, with the ultra-low-end smartphone segment projected to shift away from major global brands and towards smaller, local and regional manufacturers.
Last Updated on June 23, 2026 by Nick Ross
