The global smartphone market fell more than 4% year-on-year in the first quarter of this year, ending two-and-a-half years of consecutive growth, according to a new market intelligence report.
The situation is expected to get worse as memory shortages become more acute, but the strategy Apple has adopted is paying off…
A sharp reversal to global smartphone growth
Much of the smartphone market operates on relatively narrow profit margins, meaning that when prices for memory and other components increase by more than 100%, brands have little choice but to pass costs on to consumers. These price increases are the main reason for ending two-and-a-half years of consecutive growth.
IDC estimates that global smartphone shipments fell 4.1% year over year in the first quarter of this year. And the situation is only going to get worse from here.
The smartphone market is entering one of its most challenging periods due to severe memory supply constraints that directly impact both shipments and demand. Limited memory availability is forcing a reduction in shipments, while rising memory prices (…) are forcing many top brands to raise prices.
In some emerging markets, prices have increased by as much as 40-50%, putting a huge strain on demand (…) The market’s 4% decline is just one example of what’s to come as the memory situation intensifies on all fronts.
Apple’s strategy is paying off
IDC says both Apple and Samsung have higher margins on their premium devices, allowing them to keep prices the same and driving demand. According to the report, smartphone shipments for both companies continue to grow, with Samsung’s shipments increasing by 3.6% year-on-year and iPhone shipments increasing by 3.3%.
However, events seem to have overtaken the company’s report, as Samsung yesterday increased the prices of some of its phones, albeit in a modest way.
Affected devices include Samsung’s high-end smartphones such as the Galaxy Z Flip 7, Galaxy S25 Edge, and upper-midrange Galaxy S25 FE, as well as nearly all Galaxy tablets currently on sale. For high-end devices, Samsung hasn’t raised the starting price, but all upgraded storage variants have jumped $40 to $80.
This could leave Apple the only major company to keep its smartphone prices the same, giving it the distinct benefit of continuing to grow while the rest of the market declines.
Another analyst report yesterday suggested that Apple has made the unusual decision to sacrifice margins in favor of growth, given the unique opportunities offered by the current technology environment.
Market intelligence companies such as IDC and Counterpoint compile shipment volume estimates based on a variety of metrics, but these metrics are never completely accurate, so it’s important to note that the numbers may be inconsistent in the latest reports.
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