Decline in Smartphone Demand Evident Amidst Cost Pressures
Analysts at Counterpoint reported on Thursday that smartphone demand has notably weakened across both primary markets, as rising cost inflation emerges as a critical issue.
The escalation in memory prices is compelling manufacturers to hike prices, while consumers exhibit a growing sensitivity to cost increases.
U.S. Smartphone Sales Decline by 5%
In the U.S., smartphone sales experienced a 5% decrease year-over-year during the second quarter, attributed largely to increased memory costs and broader economic pressures that adversely affected consumer demand, observed Counterpoint analyst Blake Przesmicki.
This decline was particularly pronounced at the lower end of the market. Sales of smartphones priced under $100 plummeted by 64%, as some manufacturers either halted shipments of certain models or raised prices to counterbalance rising memory expenses.
Prepaid smartphone sales decreased by 11%, yet brands like Samsung and Motorola managed to capture market share as weaker competitors retreated.
During this period, Motorola implemented price increases on several Moto G models, while Samsung raised the price of the Galaxy A17 by $50 in July.
Looking ahead, Counterpoint anticipates that average selling prices for smartphones will rise again in the third quarter.
Apple is expected to increase prices for its forthcoming iPhone 18 lineup, while Google plans to launch its Pixel 11 devices at a higher price point compared to the Pixel 10 series.
Nonetheless, Counterpoint foresees a robust upgrade cycle for Apple as users transition from the iPhone 15 series.
The impact of carrier subsidies will be pivotal in determining whether these price hikes adversely affect demand.
Continued Decline in China’s Smartphone Market
The situation in China remains precarious, with smartphone sales experiencing an 8.6% year-over-year decline over the initial 30 weeks of 2026, according to analyst Ivan Lam from Counterpoint.
This downturn returned to double-digit figures subsequent to the 618 shopping festival, attributable to seasonal weaknesses coupled with ongoing memory-cost inflation.
Huawei continues to lead the market, maintaining a weekly sales share above 20% since the second quarter.
Demand for its Enjoy 90 Pro Max and stable pricing strategies have bolstered its market position. Counterpoint predicts that Huawei may implement price increases in the latter half of the year to mitigate higher costs.
Conversely, Apple’s demand sharply declined following the 618 festival, causing its weekly sales ranking to drop to as low as fifth place as the company entered its routine seasonal slowdown preceding the next iPhone release.
Counterpoint noted that some demand had been artificially inflated during the shopping festival.
Memory Cost Inflation Anticipates Further Price Increases
As per Counterpoint’s analysis, the second half of the year is likely to present heightened challenges, driven by escalating memory and system-on-chip costs that will press smartphone manufacturers toward further price hikes.
Compounding this dilemma is the imperative to spend on advanced artificial intelligence technology, which is evolving from a differentiating factor to a competitive necessity, presenting additional hurdles for manufacturers coping with dwindling demand and increased hardware costs.
Counterpoint cautioned that firms unable to adapt may find themselves increasingly lagging behind their competitors.
Source link: Benzinga.com.
