Fewer people are buying new phones right now, but the two biggest names in the industry are actually selling more devices. Global smartphone shipments dropped by 4% in the second quarter of 2026 compared to last year, according to Omdia. A severe memory chip shortage is pushing up the cost to build these devices, especially the cheaper ones. While this crisis hurts overall numbers, the top two brands found a way to win.
Apple and Samsung capture more buyers despite rising component costs
Even with fewer total phones shipping worldwide, Samsung held onto the number one spot and increased its market share from 20% to 22%. The brand saw strong demand because it pushed the launch of its premium Galaxy devices into the second quarter. It also picked up new customers looking for budget options as rival companies pulled back their cheaper product lines.
At the same time, Apple reported its best second quarter in history. Its market share jumped from 16% to 20% during a time of year that is usually slow for the company. The latest iPhone models triggered a massive wave of upgrades. The brand also managed to keep its prices steady while competing manufacturers were forced to charge more.
Budget phone buyers face fewer choices as hardware prices climb
The highest price hikes are hitting phones that cost under $400. Memory and storage parts now make up over 60% of the total cost to build a budget device. Because these parts are so expensive right now, companies are making less profit on cheaper phones and shifting their focus to premium models. Other brands like Xiaomi, Oppo, and Vivo all lost market share during this quarter.
Looking ahead, experts expect the market to stay rough for the rest of 2026. Normal holiday shopping peaks will clash with the ongoing chip shortage. Phone makers will likely keep pushing expensive models to protect their profits. If you are shopping on a tight budget, you might need to delay your purchase, use a payment plan, or look into refurbished devices until prices finally drop.
The smartphone landscape is clearly splitting into two. The giants are securing their hold on the premium space, leaving budget-conscious shoppers with fewer attractive options for the foreseeable future.
