Apple Inc. (NASDAQ:AAPL), Samsung Electronics Co. Ltd. (OTC:SSNLF) and other major smartphone makers face a tougher demand environment as rising component costs push handset prices higher in the U.S. and China, according to new research from Counterpoint Research.
Counterpoint analysts said Thursday that smartphone demand weakened across both major markets, with cost inflation emerging as a key pressure point. Rising memory costs are forcing manufacturers to increase prices while consumers remain sensitive to higher costs.
U.S. Smartphone Sales Fall 5%
U.S. smartphone sales fell 5% year over year in the second quarter as higher memory prices and broader macroeconomic pressures hurt consumer demand, Counterpoint analyst Blake Przesmicki said.
Sales across the four largest manufacturers — Apple, Samsung, Motorola and Alphabet Inc.’s (NASDAQ:GOOGL) Google — declined 4%. The rest of the market plunged 45% as smaller manufacturers struggled with higher component costs. Counterpoint said larger companies have used their scale to secure components at prices smaller rivals cannot justify.
The pressure was particularly severe at the low end. Sales of smartphones priced below $100 tumbled 64% as manufacturers either stopped shipping some devices or raised prices to offset higher memory costs.
Prepaid smartphone sales fell 11%, although Samsung and Motorola gained share as weaker competitors pulled back. Motorola raised prices on several Moto G models during the quarter, while Samsung increased the Galaxy A17 price by $50 in July.
Counterpoint expects smartphone average selling prices to rise again in the third quarter. Apple is expected to increase prices for its iPhone 18 lineup, while Google is launching its Pixel 11 devices at higher prices than the Pixel 10 series carried at launch.
Still, Counterpoint expects Apple to benefit from a strong upgrade cycle as users move from the iPhone 15 series. Carrier subsidies will play a major role in determining whether higher prices hurt demand.
China Smartphone Slump Deepens
The picture is also challenging in China. Smartphone sales fell 8.6% year over year during the first 30 weeks of 2026, according to Counterpoint analyst Ivan Lam. The decline returned to double digits after the 618 shopping festival as seasonal weakness combined with continued memory-cost inflation.
Huawei remained the market leader, with its weekly sales share staying above 20% since the second quarter. Demand for the Enjoy 90 Pro Max and stable pricing supported its performance. Counterpoint expects Huawei to raise prices during the second half to offset higher costs.
Apple’s demand weakened significantly after the 618 festival. Its weekly sales ranking fell as low as fifth as the company entered its typical seasonal slowdown ahead of its next iPhone launch. Counterpoint said some demand had also been pulled forward by the shopping festival.
Xiaomi Corp. (OTC:XIACY) climbed to second place in week 30 following the launch of the REDMI Note 17 series. However, higher pricing and specification cuts hurt sales compared with the previous generation. Xiaomi subsequently introduced another round of price increases ranging from 300 Chinese yuan to 500 Chinese yuan across several product lines.
Memory Inflation Threatens More Price Hikes
Counterpoint expects conditions to become tougher during the second half as rising memory and system-on-chip costs force smartphone manufacturers toward additional price increases.
At the same time, spending on agentic artificial intelligence is becoming a competitive necessity rather than a differentiator, adding another challenge for manufacturers already dealing with weaker demand and higher hardware costs. Counterpoint warned that companies unable to keep pace risk falling further behind.
AAPL Price Action: Apple shares were up 0.31% at $303.25 during premarket trading on Thursday, according to Benzinga Pro data.
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