The global smartphone market is under unusual pressure as entry-level devices become significantly more expensive while overall shipments are expected to decline. CCS Insight projects smartphone shipments will fall 15 percent this year, signaling a weaker market at the same time that low-cost phones are losing one of their main advantages.
The sharpest impact is being felt at the bottom of the market. CCS Insight says entry-level phone prices have risen by more than 50 percent since last year, driven by higher memory costs and shifting production priorities across the chip industry.
AI demand is reshaping chip production
The latest price pressure is tied to the rapid growth of AI, which has increased demand for high-performance servers. As a result, memory makers are favoring high-margin products for servers over DRAM and NAND used in PCs and smartphones.
That shift has tightened supply for smartphone memory and pushed prices higher. CCS Insight expects the memory market to enter a supercycle that could last until 2028, extending the current strain on device makers.
Ben Hatton, a CCS Insight analyst, said the memory crisis does not appear likely to ease soon, increasing pressure on both manufacturers and consumers. He also noted that memory components now account for more than 30 percent of production costs in some smartphone models.
| Market Signal | Reported Trend |
|---|---|
| Smartphone shipments this year | Down 15 percent |
| Entry-level phone prices | Up more than 50 percent since last year |
| Q1-2026 smartphone shipments | Down 4.4 percent |
| Used smartphone market in Q1-2026 | Up 4 percent |
| Used smartphone market in 2026 | Projected to rise about 15 percent |
Weak demand and rising prices are moving together
The pressure on the market is not coming from costs alone. CCS Insight also reported that new smartphone shipments fell 4.4 percent in the first quarter of 2026, even after distributors and retailers stocked up early to prepare for higher device prices.
Market expectations remained gloomy throughout the early months of the year. In January 2026, the global smartphone market was expected to fall by at least 5.2 percent as phone prices rose by 6 to 8 percent, while February 2026 brought forecasts of an 8 percent drop in shipments alongside a 14 percent increase in prices.
The used phone market is gaining ground
As new phones become more expensive, organized used smartphone sales are expanding. CCS Insight says the segment grew 4 percent in the first quarter of 2026 and is expected to rise about 15 percent over the full year.
Consumer behavior is helping support that trend, with more buyers looking for cheaper alternatives. At the same time, the used-phone market faces its own constraint: weaker sales of new smartphones may eventually reduce the supply of pre-owned devices.
Replacement cycles are also getting longer. Many users are now keeping their phones for more than four years before upgrading, a notable shift from the two- to three-year replacement habits that were more common a few years ago.
Hatton said the used smartphone market still has room to absorb some unmet demand from the new-device segment. Even so, he warned that a slower pace of flagship launches could make it harder to maintain enough used-device inventory in the near term.
