In June 2026, leading research institutes IDC and Counterpoint released updated industry reports. Plagued by skyrocketing memory chip prices and escalating geopolitical tensions in the Middle East, the global smartphone market is set to endure its worst annual performance on record in 2026. Global shipments are projected to drop 13.9% year-on-year, while the average selling price (ASP) jumps to an all-time high of $550 (around 3,800 RMB), an increase of $100 from last year, meaning consumers barely get a decent new phone without a budget of nearly 4,000 RMB.

IDC originally forecast a 12.9% annual shipment decline but downgraded its projection to 13.9%, mainly due to intensified US-Iran conflicts. Blocked shipping in the Strait of Hormuz fuels global crude oil hikes, pushing up costs across the entire industrial chain from petrochemical raw materials and electronic components to global land, sea and air logistics for finished phones. Meanwhile, booming AI infrastructure has grabbed massive DRAM and NAND flash capacity, triggering severe memory shortage and sharp price hikes for core phone hardware, jointly lifting end-product pricing.

Crushed by mounting comprehensive costs, smartphone OEMs have reshuffled product layouts: cutting low-end phone output and overall shipment targets, shifting R&D and supply chain investment toward mid-to-high-end models and phasing out budget-priced devices. Counterpoint echoed the bearish outlook, estimating full-year global smartphone shipments at roughly 1.08 billion units, the lowest figure since 2013 and down from its earlier February prediction of a 12.4% drop amid weaker-than-expected consumer demand.

The record-high average price has significantly raised consumers’ upgrade threshold; a budget of 4,000 RMB has become the baseline for new phone purchases in China, with ultra-low-cost entry-level handsets rapidly disappearing from shelves. Industry insiders warn high smartphone pricing will persist as memory tightness and Middle East tensions linger, forcing manufacturers to prioritize premium products and marking the end of the affordable budget smartphone era.