Global smartphone System-on-Chip (SoC) shipments experienced a significant decline of 15% year-on-year in the first half of 2026, primarily attributed to a sharp increase in memory costs, cautious inventory management by original equipment manufacturers (OEMs), and extended smartphone replacement cycles. The latest data from Counterpoint Research indicates a challenging period for the semiconductor industry serving the mobile sector.
Memory prices, a critical component in smartphone manufacturing, surged by over 300% year-on-year in Q2 2026. This unprecedented rise meant that memory costs surpassed SoC costs across all smartphone segments during H1 2026, placing immense pressure on device pricing and manufacturer profitability.
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Smartphone Vendor Performance Varies Amid Market Downturn
The market downturn disproportionately affected major SoC vendors. MediaTek and Qualcomm, two dominant players, saw their shipments fall by more than 25% year-on-year in H1 2026. In contrast, Apple, Samsung, Google, and UNISOC recorded shipment growth, each driven by distinct market dynamics.
Shivani Parashar, a Senior Analyst at Counterpoint Research, highlighted the specific factors influencing vendor performance. “Apple’s market share increased by 4% in H1 2026 from H1 2025, propelled by the robust performance of the iPhone 17 series,” Parashar noted. Conversely, Qualcomm’s premium segment growth was constrained as the Samsung Galaxy S26 series adopted a dual-sourcing strategy, incorporating both the Snapdragon 8 Elite Gen 5 and Samsung’s proprietary Exynos 2600. Additionally, softer sales of the Xiaomi 17 series contributed to Qualcomm’s premium shipment pressures.
MediaTek’s decline was largely concentrated in its low-end and entry-level 5G chipsets, which were heavily impacted by the ongoing memory crisis. However, the company’s premium 9500 series demonstrated resilience, securing design wins with brands such as vivo, OPPO, Pocophone, and Redmi.
UNISOC demonstrated significant growth, benefiting from the migration of many entry-level smartphone models to its 4G platforms. This shift allowed OEMs to reduce Bill of Materials (BoM) costs in response to rising memory prices. Furthermore, UNISOC made strides in 5G adoption through strategic partnerships with Pocophone and Redmi. For more insights into these market shifts and broader smartphone industry trends, visit TechnoSports (https://technosports.co.in/).
GenAI Smartphones Defy Market Trend
Despite the overall decline and significant cost pressures, shipments of GenAI (Generative Artificial Intelligence) smartphone SoCs registered a 24% year-on-year growth in H1 2026. This growth underscores a sustained premiumization trend within the market and strong consumer demand for advanced AI features in mid-high, premium, and flagship smartphone tiers. This segment’s expansion indicates that consumers are willing to invest in devices offering cutting-edge AI capabilities, even as overall hardware costs escalate.
Outlook: Continued Challenges Expected
The outlook for the remainder of 2026 remains cautious. Counterpoint Research projects that global smartphone SoC shipments will decline by 14% year-on-year for the full year. The entry-level market is anticipated to be the most severely affected, with shipments expected to fall by over 30% year-on-year.
Principal Analyst Soumen Mandal warned that the memory supply shortage is not expected to normalize before the second half of 2027. “In H1 2026, smartphone memory costs surpassed SoC costs across all price segments, and we do not expect the memory supply to normalize before H2 2027, which means the smartphone industry could experience another difficult year in 2027,” Mandal stated. This prolonged shortage suggests that cost pressures and supply chain challenges will continue to shape the smartphone market for the foreseeable future.
