Smartphone Prices Skyrocket as Component Costs Soar

Smartphone manufacturers are facing increased pressure from rising component costs, particularly in memory and system-on-chip prices. According to Counterpoint Research, this has led to a decline in sales across major markets, with U.S. smartphone sales falling 5% year over year in the second quarter.

The largest players, including Apple, Samsung, Motorola, and Google, saw their sales decline by 4%, while smaller manufacturers experienced a 45% drop in sales. This is largely due to larger companies' ability to secure components at lower prices, leaving smaller rivals struggling to keep up.

Prepaid smartphone sales fell 11%, with Samsung and Motorola gaining share as weaker competitors pulled back. Both companies raised prices on select models during the quarter to offset higher memory costs. Counterpoint expects smartphone average selling prices to rise again in the third quarter, with Apple expected to increase prices for its iPhone 18 lineup and Google launching its Pixel 11 devices at higher prices.

Apple is expected to benefit from a strong upgrade cycle as users move from the iPhone 15 series, while carrier subsidies will play a major role in determining whether higher prices hurt demand. In China, smartphone sales fell 8.6% year over year during the first 30 weeks of 2026, with Huawei remaining the market leader.

Counterpoint expects conditions to become tougher during the second half as rising memory and system-on-chip costs force manufacturers toward additional price increases. This will add another challenge for manufacturers already dealing with weaker demand and higher hardware costs, making it essential for companies to adapt quickly or risk falling behind.