Smartphone Slump. The smartphone has run into tough times. Sales of everyone’s favorite device could see the largest decline on record this year, according to market tracker IDC.
Worldwide smartphone shipments are expected to decline 14% in 2026 to 1.09 billion units, according to IDC. That’s down from IDC’s February forecast of a 12.9% decline and would mark the steepest annual contraction in smartphone history, the research firm said.
There’s one potential ray of light: While the industry outlook might be getting worse, estimates for Apple iPhone sales are actually improving.
IDC now expects iPhone shipments to decline 5.2% this year, better than the previous forecast for an 8.1% decline. Handsets powered by Android, by contrast, could see a 20% year-over-year shipment drop, according to IDC.
The expected decline in smartphone shipments is being driven in part by the elevated cost of memory, a critical component in the buildout of artificial intelligence data centers. There’s a global shortage of most components used to power AI, like memory, as demand far outpaces supply. That’s led to soaring costs, a boon for memory makers like Micron Technology and a headwind for phone makers.
In recent months, other factors have emerged that are challenging smartphone sales.
“The U.S.-Iran war has added a fresh layer of cost pressure for smartphone OEMs, driven by rising oil prices and transportation costs,” Nabila Popal, IDC senior research director, wrote in the firm’s latest report. Combined with higher memory costs, these pressures are leading to vendors reducing shipments, raising prices, and concentrating on pushing out higher priced phone tiers, Popal added.
“That’s elevating smartphone [average selling prices] to a record $550, up $100 from last year,” she said.
Apple was better prepared than peers for the global chip shortage, according to IDC.
“Apple has done three things that few of its competitors have managed: it secured memory supply early, it built a portfolio strong enough to drive a remarkable turnaround in China, and it positioned the iPhone 17 to capture demand exactly when consumers in developed markets are extending replacement cycles and trading up,” Francisco Jeronimo, vice president for worldwide client devices at IDC, wrote.
Analysts expect Apple to show off highly anticipated AI updates at the company’s Worldwide Developers Conference, which kicks off on June 8. Apple is also expected to launch an expensive foldable iPhone this year. Strong demand for high performing AI and a physical redesign of the iPhone could bring in new customers and lead existing ones to update their current devices.
Apple shares have risen 15% this year. The stock was up 0.7% Wednesday afternoon, on pace to close at a record.
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Write to Angela Palumbo at angela.palumbo@dowjones.com
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