The global smartphone industry is bracing for a significant downturn in 2026 with shipments expected to decline by nearly 17%, as component costs soar due to a severe memory chip shortage driven by AI demand. Against this backdrop, Apple and Huawei prepare to launch new foldable phones, hoping to spark renewed consumer interest and arrest weakening market momentum.
- Smartphone shipments forecast to fall 16.7% in 2026, the largest annual drop ever.
- Apple expected to capture 40% of the foldable phone market by 2027.
- Memory chip shortages trigger device price hikes and squeeze industry profits.
What happened
Apple and Huawei are both preparing major foldable smartphone launches in early September, with Apple's event set for September 9 and Huawei unveiling its new Mate XT 2 shortly before. These launches arrive at a critical time as the global smartphone market faces its sharpest downturn in decades. Industry analysts predict a 16.7% decline in shipments for 2026, worsening previous forecasts and driven largely by a severe memory chip shortage fueled by surging demand for AI infrastructure.
This memory shortage has led to sharply higher component costs that are pushing up the average selling price of smartphones by about 27% this year. The scarcity and expense of memory chips are not only impacting smartphones but also other consumer electronics segments, including PCs, tablets, and digital cameras, squeezing vendor profitability and forcing a reevaluation of pricing and supply strategies.
Why it matters
Foldable devices represent the most promising growth segment within the overall smartphone industry, which is otherwise contracting. IDC projects the foldable phone market to grow by 13% in 2026 and then by 18% in 2027. Apple’s entry into foldables is expected to be a significant catalyst, with shipments forecast to exceed 17 million units by 2027 and capturing a substantial share of the market long dominated by Huawei and Samsung.
These foldable launches are viewed as a potential lifeline for manufacturers struggling with the dual pressures of declining volumes and rising costs. The shift in consumer willingness to pay higher prices for innovative form factors may mark a departure from years of downward price pressure, signaling an important inflection point for the smartphone sector and related supply chains.
What to watch next
Market watchers will closely follow Apple’s September 9 event for how its first foldable iPhone is received, including any insights from new CEO John Ternus’ keynote. The reception and sales performance of Apple’s foldable device could reshape competitive dynamics and consumer expectations across the premium smartphone category, especially in China and other key markets.
Additionally, the ongoing memory chip supply crisis and price trends will remain critical. Vendors with scale and supply leverage may outperform as consumers adapt to higher prices. Observers will also monitor financial impacts on other electronics makers like Insta360, which reported steep profit declines linked to rising memory costs, to gauge the broader ripple effects of this component scarcity.