Preliminary data from IDC's Worldwide Quarterly Mobile Phone Tracker shows that the global smartphone market fell sharply by 22.0% year over year in the third quarter of 2026, with shipments reaching only 255.3 million units.

The 22% year-over-year decline in quarterly shipments marks the largest year-over-year drop for a single quarter since records began. The memory chip crisis driven by the AI wave continues to batter the smartphone industry, with prices of core components surging to historic highs and supply chain availability remaining under sustained pressure.

Nabila Popal, senior research director for worldwide devices at IDC, said: "The market downturn the industry had long anticipated fully materialized in the third quarter of this year, with shipments posting a record 22% year-over-year decline. But this is not the worst case. Current data indicate the market has not yet bottomed. Memory chip prices have soared about 350% compared with last year and are still on an upward trajectory, putting enormous pressure on manufacturers' profit margins and shipment volumes. Although the pace of memory chip price increases has slowed, with quarter-over-quarter gains easing to the low double digits this quarter after reaching 50%-100% in previous quarters, costs for other key components remain elevated, further deepening the industry's difficulties."

IDC forecasts that global phone market growth will remain constrained in 2027, with a market recovery unlikely before 2028 at the earliest. More critically, major smartphone manufacturers are gradually realizing that the industry's cost structure has undergone a permanent structural shift. Despite the challenging outlook, periods of market turmoil also create new winners, and the importance of product strategy and technological innovation has been elevated to unprecedented levels. Vendors able to adjust product positioning, pricing strategies and market stimulation measures for a high-cost environment will have a better chance of increasing their market share.

Francisco Jeronimo, vice president of worldwide devices at IDC, said: "The third quarter fully exposed the impact and disruption of the memory chip crisis. Pressure has been transmitted from upstream suppliers to end consumers. After end prices rose, many users chose to keep using their old phones and delay upgrades. Chinese phone brands are in a particularly difficult position, as many of their low-end models, amid weakening demand, must balance preserving profit with maintaining shipment scale. Over the coming quarters, overall shipments will remain under pressure, while vendors with scale advantages, stable supply chains and a high proportion of premium products will continue to grab share in a shrinking overall market."

Kiranjeet Kaur, associate research director for worldwide devices at IDC, noted: "Vendor rankings are broadly similar to the previous quarter, with Samsung and Apple continuing to gain share, while shipment declines at Xiaomi, OPPO and vivo further intensified. Facing price increases, if consumers have to replace their phones, rather than waiting for prices to fall, they should focus on the year-end promotional season, when discounts are expected to reach their highest level of the year. Despite weak overall sales, some vendors, anticipating tighter component supply next year, have already raised production plans. If end demand remains sluggish, inventory buildup could emerge in 2027, bringing new downside risks to our industry forecast for 2027."