Phone shipments just had their worst third quarter since 2012, and memory chips are why

Counterpoint published its preliminary estimates on Monday, October 12. Global shipments fell 20% year over year in July, August and September, the lowest third-quarter level in 14 years.

This was not a surprise to the firm. Counterpoint says the decline was close to what it expected, and it calls Q3 the second quarter in a row to take the full brunt of the memory crisis.

The first of those two quarters was already rough. For the second quarter, Counterpoint said shipments fell 11% year over year, the weakest April to June since 2013. So the drop more than doubled in three months, and the record low moved back another year.

By the numbers:

• Global shipments: down 20% year over year
• Lowest Q3 since: 2012
• Retail phone prices: up 20% so far in 2026
• Data type: preliminary sell-in shipments, meaning phones shipped to stores and carriers, not phones sold to people

That last point matters. Sell-in counts what phone makers push into shops. Final numbers can still move a little.

Every phone needs two kinds of memory. DRAM is the working memory that keeps your apps running. NAND is the storage that holds your photos and messages.

Counterpoint says prices for both kept climbing in Q3. That sharply inflated the cost of building a phone and deepened supply shortages, which disrupted shipment plans for most phone makers.

Reuters, which reported the numbers the same day, ties the squeeze to AI. It writes that AI infrastructure projects have cornered memory supplies, driving up production costs for everyone else.

In real life Think of a farmers market where one buyer shows up and orders every tomato in sight for a giant restaurant chain. The tomatoes still exist. You just pay a lot more for the three that are left, and the salsa stand down the row makes less salsa.

We have watched this coming for weeks. Micron's CEO said the memory shortage could last until at least 2028, and Huawei said memory had already added about $200 to every phone it makes.

The two most expensive brands. Counterpoint's chart shows Samsung and Apple both growing their share of a shrinking market.

Counterpoint counts OnePlus and realme inside OPPO.

Samsung held first place. Counterpoint credits its focus on higher average selling prices and strong early demand for the Galaxy Z Fold8. IT Home's summary of the report adds that steady component supply helped its mid-range Galaxy A phones in emerging markets.

Apple reached 22%, the first time it has passed 20% in any third quarter. Its volume still fell. Counterpoint says that is mostly because there was no base iPhone 18 this year, so stores got fewer phones in the launch month than they did with the full iPhone 17 lineup. The iPhone 18 Pro models launched more strongly than their predecessors, especially in China and India.

Cheaper phones feel memory prices the most. The same jump in parts costs is a small slice of a premium phone and a big slice of a budget one.

Counterpoint says Xiaomi pulled back from low-priced models and non-core overseas markets, raised its prices and tightened shipment plans so it would not sell phones at a loss. OPPO also put margins ahead of volume.

The big picture: Counterpoint says premium demand held up comparatively well, while higher prices put more pressure on the mass market. Shilpi Jain, a senior analyst at the firm, put it this way:

"The extreme memory shortage is pushing the smartphone market into a more selective phase, reshaping OEM strategies and even consumer behavior."

China tells a similar story with a different leader. IDC's preliminary data, released Tuesday, October 13, shows China's smartphone shipments fell 15.4% to 57.9 million units in Q3.

• Huawei: shipments up 17.3%, about 12.2 million phones, 21.1% of the market (up from 15.2%)
• Apple: 17.8% of the market (up from 15.8%), even though its shipments fell 4.3% year over year and 15.1% from the previous quarter
• OPPO, vivo, Xiaomi: down 17.6%, 24.9% and 20.4%, according to TechNode
• Lenovo: the only other top-10 brand that grew, up 1.1%
• Wiko: the biggest drop in the top 10, down 74%, to 0.8% of the market

IDC says Huawei did well thanks to a broad lineup and relatively restrained price increases. It says Apple's new iPhones were received better than expected, but fewer models meant slightly lower shipments. 9to5Mac, which translated IDC's commentary, notes that Honor was the only major brand to grow from the previous quarter, which IDC reads as a possible rebound. Like Counterpoint's numbers, IDC's are preliminary.

Neither firm thinks so. Counterpoint calls the outlook for the rest of 2026 challenging. It expects more production cuts, tighter lineups and more focus on premium phones, and says a meaningful recovery is unlikely until component costs and supply improve.

IDC is just as cautious. It expects component costs to stay elevated over the next several quarters, keep pushing device prices up and stretch replacement cycles further as people "accept and adapt to higher prices." It does not expect cost pressure to ease through much of 2027.

What's next: Q4 brings the holiday season, when phone makers usually ship the most. This year it also brings a new kind of iPhone. AppleInsider notes the foldable iPhone Duo won't reach buyers before October 23, so its effect on the market is still unknown.

Because new ones cost more. Counterpoint says retail prices are up 20% this year, and Jain says consumers are holding on to their devices longer than estimated.

She adds that buyers are increasingly considering refurbished phones and choosing higher-value devices when they do upgrade. The phone market is not shrinking because people stopped wanting phones; it is shrinking because the parts got expensive.

• Expect higher prices: Counterpoint says phone prices are up 20% this year, and both firms expect component costs to stay high into 2027.
• Your current phone is worth keeping: a new battery or screen repair now looks better next to a pricier upgrade, and many buyers are already doing this.
• Refurbished is a real option: Counterpoint says more people are looking at refurbished phones, so that market is getting more attention.
• Budget phones feel it most: brands that sell cheaper models are cutting shipments, so fewer low-cost choices may reach stores.