Smartphone Sales Just Hit a 14-Year Low and the Slide Is Getting Faster

The global smartphone market just had its worst July to September quarter in 14 years. Shipments fell 20% year on year in Q3 2026, according to Counterpoint Research, taking volumes to the lowest third-quarter level since 2012.

The number is bad on its own, but the direction is what should worry the industry. Counterpoint's early estimates put the first-quarter decline at 6% and the second quarter at 11%. The fall nearly doubled from Q1 to Q2, and then nearly doubled again in Q3.

AI data centres are taking the memory your phone needs

Every smartphone needs two kinds of memory chips: DRAM, which is the RAM, and NAND, which is the storage. The companies that make these chips have been sending more of their capacity to AI data centres, which pay far more. Back in April, Counterpoint analyst Shilpi Jain said the market's decline was driven mainly by memory makers prioritising AI data centres over consumer electronics.

That squeeze got tighter in Q3. Counterpoint says rising DRAM and NAND prices pushed up the share of memory in a phone's bill of materials, and some brands saw major disruptions to their shipment plans. Brands have passed the cost on to buyers. Global retail smartphone prices have risen by about 20% since the start of 2026, according to the same report.

Samsung and Apple held on while Chinese brands slid

Samsung stayed at number one with a 23% share. Its shipments fell 3%, but its share rose by four percentage points because everyone else fell harder. Apple took 22%, the first time it has crossed 20% in a third quarter, even though there was no base iPhone 18 this year, as AppleInsider reports.

The damage was concentrated among brands that live on volume. Xiaomi's shipments fell more than 30% and its share dropped from 14% to 10%. OPPO slipped from 12% to 9% and vivo from 9% to 8%, with both posting declines of over 20%.

This pattern was visible in July. Counterpoint said then that entry and mid-tier phones had become "structurally unfeasible at previous price points". Those are exactly the segments where Xiaomi, OPPO and vivo sell most of their phones.

What this means for Indian buyers

India has been feeling this all year. Counterpoint said Indian smartphone shipments fell 3% in Q1 2026, the weakest quarter in six years, with more than 80 models getting average price hikes of 15%. The second quarter was worse, with India's market falling 10%.

The budget segment has taken the biggest hit. The Redmi 15C with 4GB RAM and 128GB storage launched at Rs 12,499 and was selling at Rs 16,999 by June, a jump of Rs 4,500 on a phone meant for first-time and price-conscious buyers.

Don't expect prices to come down soon

Counterpoint says the outlook for the rest of 2026 stays difficult, and a full recovery is unlikely until component costs and supply improve. In July, it forecast a roughly 14% fall in shipments for the full year and said the memory shortage could run into 2027.

For anyone planning to buy a phone in the coming months, waiting for prices to fall is unlikely to pay off. This festive season's discounts may be the best prices you see for a while.