The global smartphone market is in trouble. Shipments fell 4% year-on-year in the second quarter of 2026, as a deepening memory crisis choked supply chains and pushed component costs to painful new highs. According to Omdia, the crunch is hitting hardest in the budget segment, where margins are already thin and consumers are the most price-sensitive.
But not everyone is suffering equally. Samsung and Apple both grew shipments during the quarter, picking up 2 and 4 percentage points of market share respectively compared to Q2 2025. That kind of divergence at the top of the market tells a bigger story: scale, pricing power, and supply chain control now matter more than ever.
The result is a market that is splitting in two. Premium vendors are holding their ground or gaining it. Budget players are getting crushed.
Samsung stayed at the top of the rankings with 22% market share. Its delayed Galaxy S26 launch pushed some premium demand into Q2, giving it a boost just when the market needed one. At the same time, Chinese rivals scaled back their budget lineups and raised prices, which opened the door for Samsung to gain share lower down the market too.
Apple had an even more remarkable quarter. It posted a record 20% market share in Q2, which is historically its weakest period of the year. The iPhone 17 cycle is shaping up as one of the strongest upgrade cycles in Apple’s history. Apple also kept iPhone pricing stable while competitors were raising theirs, which made its devices look like better value by comparison. That said, Apple did raise prices across other products toward the end of the quarter, and analysts are now watching to see whether iPhones will follow suit later in the year.
Below the top two, the picture gets harder. The remaining top five vendors all held their positions but face real pressure:
- Xiaomi held third place with 11% market share
- OPPO stayed fourth at 10%, while going through a restructuring of its three-brand strategy
- vivo rounded out the top five with 8%
The core problem driving all of this is memory. Costs for memory and storage have risen by four to five times compared to a year ago, according to Runar Bjorhovde, Principal Analyst at Omdia. That is not a rounding error. It is a structural shock. Memory and storage now account for more than 60% of the total component cost for budget phones, and more than 30% for high-end models. For brands competing in the sub-$400 segment, that kind of cost spike is nearly impossible to absorb without either raising prices or cutting margins to zero.
There is no quick fix in sight. Omdia expects memory prices to start falling no earlier than the second half of 2027, and even then, they are unlikely to drop back to pre-2025 levels. That means the pressure on mid-range and budget vendors will continue for at least another 18 months.
New bottlenecks in chip foundry capacity are also adding to costs beyond just memory. The supply crunch is broader than many in the industry initially expected.
Bjorhovde also flagged that the next two quarters could be even worse for volumes. Normally, Q3 and Q4 are strong seasons driven by new product launches, holiday shopping, and major retail events. But this year, seasonal demand peaks will collide with constrained supply, which is a bad combination for anyone trying to move high volumes at accessible price points.
The likely industry response is a shift further upmarket. Vendors will push higher-priced devices to protect margins, but that leaves budget-conscious buyers with fewer options. Omdia expects many mass-market consumers to delay purchases, accept lower-spec devices, use financing schemes, or turn to the refurbished market instead.
This is not just a short-term adjustment. Le Xuan Chiew, Research Manager at Omdia, described the strategic shifts vendors are making now as permanent changes rather than temporary fixes. Companies that can manage portfolio complexity, pricing strategy, and supply chain risk at the same time are the ones most likely to come out of this stronger. For smaller or less-capitalized players, the next year could be genuinely difficult.