Global Smartphone Shipments Decline 11% Amid Memory Chip Shortage
Global smartphone shipments fell by 11% in the last quarter, reaching their lowest second-quarter level since 2013. This significant drop is primarily attributed to the rising costs of DRAM and NAND chips, which have seen increased demand from the AI computing sector. The shift in component allocation has led to higher manufacturing costs for consumer devices like smartphones and PCs, subsequently driving up prices and reducing consumer interest in new purchases. Budget smartphones, priced at $500 or less, are particularly affected, with memory potentially accounting for half of their total manufacturing cost.
Smartphone shipments globally experienced an 11% decrease in the most recent quarter, marking the lowest second-quarter level recorded since 2013. This substantial decline follows a period where smartphone shipments had already begun to plateau, ending previous eras of consistent double-digit growth.
Analysts attribute the drop primarily to the escalating prices of DRAM and NAND chips. Manufacturers have largely redirected their focus and resources to support the burgeoning AI computing industry, resulting in a scarcity of these crucial components for consumer electronics such as smartphones and personal computers.
The rising costs of memory chips are translating into higher retail prices for smartphones, which in turn is diminishing consumer demand. This issue disproportionately impacts budget devices, specifically phones priced at $500 or less, where memory costs can now constitute up to half of the total manufacturing expense. These devices have observed quicker and more substantial price increases compared to flagship models.
For flagship devices, memory now accounts for more than a quarter of the total cost, a notable increase over the past year. Despite these challenges across the market, there remains greater profit potential in the high-end segment, allowing some manufacturers to navigate the current economic and supply chain pressures more effectively.
According to Counterpoint, the 11% drop brings smartphone shipments to their lowest second-quarter level since 2013. A report from market research firm Omdia highlights the disproportionate impact of higher memory costs on phones priced at $500 or less.
