Memory costs push smartphone shipments to lowest Q2 since 2013
Counterpoint says global smartphone shipments fell 11% in the second quarter as DRAM and NAND prices rose, with budget devices hit hardest.
By Hana Yoshida · Markets Reporter
2 min read
Global smartphone shipments fell 11% in the second quarter, taking the market to its weakest Q2 showing since 2013, according to Counterpoint Research. The decline shows how the AI computing boom is pushing up memory costs and adding pressure to a phone market that had already stopped delivering easy growth.
Counterpoint attributed the drop to rising prices for DRAM and NAND chips, two core components in smartphones and PCs. Manufacturers have shifted more supply toward AI-related computing demand, leaving fewer memory components available for consumer devices, according to the research firm.
The pressure is landing after several years in which smartphone shipments had already flattened. The period when most phone makers could count on double-digit growth has ended, and the number of companies making handsets has shrunk.
Ars Technica reported that Apple and Samsung are benefiting as some rivals struggle with the shortage-driven downturn. The broader market, however, is facing weaker demand as higher component costs feed into device pricing.
Budget phones face the sharpest squeeze
Omdia said the memory price increase is especially difficult for phones priced at $500 or less. In those devices, memory can now make up as much as half of the total manufacturing cost, according to the market research firm.
That cost structure leaves less room for manufacturers to absorb higher chip prices without raising retail prices. Omdia said lower-cost phones have seen faster and larger price increases than flagship models.
Flagship phones are also affected, but the economics are different. Omdia said memory now accounts for more than a quarter of the manufacturing cost of high-end devices, a sharp rise over the past year, while premium phones still offer manufacturers more profit than budget models.
As handset prices rise, fewer consumers are choosing to replace or upgrade their phones, Counterpoint said. That weakens shipment volumes at the same time manufacturers face higher bills for essential components.
The reports point to a market split between premium brands that can better withstand higher input costs and lower-priced devices where memory inflation cuts more deeply into margins. Counterpoint’s shipment data shows the result at the industry level: the weakest second quarter for smartphone shipments in more than a decade.
This story draws on original reporting from Ars Technica.