Apple, Samsung could gain market share as ‘ultra-cheap smartphone’ comes to an end: Report

IDC says the smartphone market could be heading towards its worst year on record, with a new report predicting there could be a 13.9% decline in shipments this year. The report notes that smartphone shipments are expected to fall to 1.09 billion units in 2026, which would mark the steepest annual decline in smartphone history.

What’s behind the smartphone shipment drop?

The report notes that memory chip shortages are still the primary driver behind the slowdown. However, the market research company says the ongoing Iran–United States conflict has now added fresh pressure on smartphone makers through higher oil and transportation costs.

The mounting economic pressures are said to be forcing smartphone manufacturers to reduce shipments, raise prices and concentrate on higher-priced segments.

The report also notes that average smartphone selling prices are expected to hit a record high of $550 in 2026, roughly $100 higher than last year.

“The deepening memory shortage crisis remains the dominant force behind the record 14% drop this year, but it is no longer the only one,” Nabila Popal said in the report.

“The US-Iran war has added a fresh layer of cost pressure for smartphone OEMs, driven by rising oil prices and transportation costs. Combined, these pressures are compelling vendors to reduce shipments, raise prices and concentrate on higher price tiers,” Popal added.

End of ultra-cheap phone era

The report also notes that the “era of ultra-cheap smartphones is over” as manufacturers struggle with higher component costs.

The slowdown is expected to be felt most strongly in emerging markets, with shipments in the Middle East and Africa predicted to decline by 23%, while Central and Eastern Europe are expected to see a 19% drop. Asia Pacific markets excluding Japan and China are also expected to fall by 14%.

“Because the sub-$200 segment is shrinking the fastest, the economic fallout is expected to disproportionately devastate emerging markets,” the report noted.

The report also warns that smaller Android brands focused heavily on budget smartphones may face the biggest challenges over the next 18 months as higher memory and NAND costs continue squeezing profit margins.

Defining year for Apple

The report notes that Apple could emerge as one of the few winners despite the broader market slowdown. Android phone shipments are expected to decline by 20% year-over-year, although Samsung could still gain market share due to its stronger premium and mid-range offerings.

Meanwhile, Apple is said to have secured the memory supply it needed, while demand for its iPhone 17 lineup is reportedly strong across developed markets.

“2026 will be a defining year for Apple,” Francisco Jeronimo said in the report. “In a year when the broader smartphone market will record its steepest decline in history, iOS will deliver its highest annual share ever, at 22%.”

Foldable smartphones are also expected to remain one of the rare growth categories this year. IDC predicts foldable shipments could grow 20% year-over-year in 2026, helped partly by Apple’s rumoured entry into the foldable segment with the iPhone Ultra later this year.