The global smartphone market is facing a significant downturn, with expectations that smartphone shipments will drop to their lowest level since 2013. Factors contributing to this decline include price increases in memory semiconductors driven by artificial intelligence demands, and supply chain disruptions exacerbated by recent geopolitical tensions in the Middle East, particularly from Iran. As a result, global smartphone shipments are projected to decrease by 12.4% to around 1.1 billion units this year, according to market research firm Counterpoint Research.

Increased prices of DRAM and other memory types are predicted to be the primary factor leading to the drop in smartphone shipments. With AI applications focusing heavily on the demand for general-purpose memory, supply has struggled to keep up, resulting in overall increases in the cost of smartphones and other electronic devices. Analysts suggest that challenges in supply will persist through at least the end of 2027, with smaller manufacturers likely to face greater pressures than large companies like Samsung or Apple, which can source their components more independently.

Moreover, the logistics uncertainty stemming from the Middle East crisis adds another layer of concern for the smartphone market. The closure of the Strait of Hormuz has pushed oil prices higher and forced air transport routes to reroute, consequently raising shipping costs. Smartphones, typically high-priced items requiring swift delivery, are mostly transported by air, especially new models that require meticulous inventory management to avoid stockouts or depreciation in value. If the crisis continues, it could significantly impact transport plans and inventory levels across the global smartphone market, further threatening the stability of manufacturers, particularly those relying on refurbished parts dependent on maritime transport.