Key facts
- Global smartphone shipments are projected to fall 13.9% in 2024 to 1.08 billion units.
- This represents the steepest annual contraction on record for the smartphone market.
- The decline is attributed to a worsening shortage of memory chips.
- Chipmakers are shifting production to AI-related chips, impacting lower-end smartphone economics.
- Global smartphone wholesale prices rose 14% in Q1 while shipments fell 3.1%.
- Apple and Samsung Electronics are expected to be more resilient due to stable chip supply and stronger margins.
The global smartphone market is facing its steepest annual contraction on record, with shipments projected to fall by 13.9% to 1.08 billion units in 2024, according to Counterpoint Research. This forecast is a downgrade from previous projections, exacerbated by a worsening shortage of memory chips. The impact is most severe on lower-end smartphones as chipmakers prioritize production of AI-related chips, making entry-level devices less economical. Global smartphone wholesale prices increased by 14% in the first quarter while shipments decreased by 3.1% year-on-year. This trend is expected to continue as pre-supply shock inventory depletes, potentially leading to the disappearance of some models priced below $150. Wang Yang, a principal analyst at Counterpoint, noted that smartphone makers in the low and mid-tier segments are struggling with cost increases they cannot absorb and consumers with limited spending power. The premium segment, however, has shown more resilience. Apple reported record revenue in the first three months of the year, driven by upgrades to its iPhone 17 series, and is expected to maintain flat shipments in 2026 before rising 5% the following year. With stable chip supply and stronger margins, Apple is well-positioned to gain market share with less price pressure. Samsung Electronics maintained its volumes in the first quarter and is anticipated to see only a 4% shipment decline for the full year, outperforming the market. Transsion, heavily reliant on smartphones under $150, is forecast to experience a 32% drop in shipments, while Xiaomi and Honor are projected to decline by 28% and 16% respectively.