The global market for smartphone processors took a significant hit during the first half of 2026, with overall shipments dropping by 15% compared to the same time last year. According to a new report from Counterpoint Research, the decline is largely fueled by skyrocketing memory costs. Smartphone makers are trying to carefully manage their inventory levels while dealing with consumers who are holding onto their older devices for much longer periods.
High memory prices force phone makers into tough choices
The biggest driving factor behind the drop is the soaring cost of smartphone memory, which surged by more than 300% year-over-year in the second quarter. Because memory has become so expensive, device manufacturers are aggressively signing long-term supply contracts just to secure enough parts. As a result, the rising cost of building a smartphone is currently tied more directly to memory pricing than actual upgrades to the hardware itself.
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This financial pressure is shifting how companies pick their internal processors. Analysts report that many entry-level smartphone brands are migrating back to UNISOC’s older 4G platforms just to keep the overall cost of building the device as low as possible. This unexpected shift helped UNISOC actually post solid shipment growth during a mostly down market.
Some top chip makers lost ground while others found growth
The challenging market conditions hit the two biggest chip suppliers hard. Both Qualcomm and MediaTek saw their shipments drop by more than 25% year-over-year. Qualcomm struggled in the premium segment partly because Samsung decided to use its own Exynos chips alongside Qualcomm’s Snapdragon processors for the Galaxy S26 series. Sluggish sales of the Xiaomi 17 also limited Qualcomm’s growth in the high-end market.
Despite the overall decline, some brands had a great first half of the year:
- Apple grew its market share by 4% thanks to strong performance from the iPhone 17 series.
- Google and Samsung both posted sturdy shipment growth.
- UNISOC successfully expanded its 5G adoption through strategic partnerships with Pocophone and Redmi.
- Shipments of advanced chips for generative AI smartphones actually jumped by 24%, driven by strong consumer demand for premium AI features.
Looking ahead, analysts expect the global smartphone chip market to decline by 14% overall for the full year of 2026. The entry-level market will likely take the hardest hit, with shipments projected to fall by more than 30%. Since the memory supply issues are not expected to normalize until late 2027, the smartphone industry is likely bracing for another difficult year.
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