Key Points:
- Goldman Sachs reduced its 2026 and 2027 global smartphone shipment forecasts by 4% and 3%, predicting 1.14 billion and 1.17 billion units, respectively.
- High memory chip prices, driven by the artificial intelligence industry absorbing wafer capacity, are heavily weighing on consumer hardware demand.
- Despite falling unit sales, the smartphone market’s value is projected to rise 3% to $596 billion in 2026 due to higher premium device sales.
- Apple is projected to maintain its global sales lead with 246 million units sold in 2026, followed closely by Samsung at 235 million units.
The global consumer electronics market is facing a severe reality check as skyrocketing component prices force a major downward revision in smartphone shipments. In a newly released research note, brokerage analysts at Goldman Sachs cut their global smartphone volume estimates for both 2026 and 2027. The investment bank cited persistently high memory chip prices as a primary bottleneck stifling consumer demand, especially in highly price-sensitive entry-level markets. This forecast change signals that the highly anticipated post-pandemic recovery in mobile hardware has effectively stalled under the weight of an unprecedented silicon supply crunch.
The adjusted figures from the Wall Street brokerage reveal a significant contraction in expected unit sales. Goldman Sachs reduced its 2026 global smartphone volume estimate by 4% to 1.14 billion units, implying a painful 10% annual decline compared to its previous, more optimistic forecast of a 6% drop. For 2027, the bank trimmed its forecast by 3% to 1.17 billion units, projecting a modest 3% recovery rather than its earlier estimate of a 2% rise. Additionally, the bank introduced its first-ever volume forecast for 2028, projecting a highly conservative 1% year-on-year growth rate to reach 1.18 billion units.
The primary driver behind this persistent memory inflation is the global artificial intelligence boom. Tech giants and cloud hyperscalers are investing hundreds of billions of dollars to build massive AI data centers, which require vast quantities of high-performance, high-bandwidth memory (HBM). To capitalize on these high-margin orders, major semiconductor foundries—including Samsung Electronics, SK Hynix, and Micron Technology—have aggressively diverted their wafer production capacity away from conventional memory and toward AI servers. This massive resource reallocation has quashed the global supply of standard DRAM and NAND chips used in ordinary mobile phones, driving up wholesale component costs.
Despite the significant cut to physical unit volumes, Goldman Sachs expects the total financial value of the global smartphone market to continue growing. The bank forecasts that the global smartphone market’s total value will rise by 3% to reach $596 billion in 2026, followed by steady 2% increases in both 2027 and 2028 to reach $606 billion and $621 billion, respectively. This apparent paradox of falling volumes and rising market value is driven by a massive, forced increase in average selling prices. As component costs climb, manufacturers are passing the expenses down to retail buyers, while actively shifting their product portfolios toward premium devices priced above $600.
While premium brands can rely on brand loyalty to absorb these price increases, the low-end, budget-friendly smartphone segment is facing a near-complete collapse. In highly price-sensitive emerging markets, including India and Southeast Asia, consumers are highly sensitive to price increases. Industry data shows that local prices for entry-level models have spiked, causing the sub-$100 smartphone market in India to collapse by a staggering 59% over the past year. Because memory chips constitute a massive portion of the bill of materials for low-margin phones, budget manufacturers simply cannot absorb the 250% surge in low-power DDR memory costs without raising retail prices, which instantly destroys consumer demand.
Within this highly polarized and expensive market environment, the world’s most dominant brands are expected to consolidate their lead. Goldman Sachs projects that Apple will maintain its global crown in smartphone sales, with a forecasted 246 million iPhones sold in 2026. This outperformance is driven by Apple’s strong pricing power and the high demand for its premium, high-margin devices, which insulated the company from the worst of the budget-market contraction. Samsung is expected to follow closely in second place, with a projected 235 million smartphones shipped in 2026, as the South Korean giant leverages its own internal memory division to secure a reliable component supply.
As new, factory-fresh smartphones become increasingly expensive, a growing portion of consumers are choosing to hold onto their current devices longer or explore the pre-owned market. Industry reports indicate that the average age of traded-in mobile devices has held steady at nearly four years, as users delay expensive upgrades. Consequently, the global market for refurbished and pre-owned smartphones is projected to grow by an impressive 15% this year. This structural shift towards secondhand devices is allowing consumers to access modern mobile networks and digital services without paying the inflated retail premiums demanded by new hardware.
The prospect of a rapid recovery in the memory supply chain remains highly unlikely, as structural changes in the semiconductor industry are built to last. Industry researchers at Goldman Sachs recently warned that the artificial-intelligence-driven squeeze in memory chips will actually run tighter in 2027 than in 2026, and will likely persist well into 2028. Because producing high-capacity HBM stacks requires up to four times more wafer capacity than conventional DRAM, chipmakers cannot easily ramp up production of standard consumer memory. This means that computer and phone manufacturers will face high component procurement costs for years to come.
Ultimately, the ongoing smartphone crisis serves as a stark reminder of the fragile physical supply chains that underpin the modern digital economy. As long as technology giants prioritize the rapid, unconstrained deployment of artificial intelligence over consumer hardware, the supply bottlenecks facing everyday electronic devices will persist. For mobile phone brands, the coming years will test whether they can successfully re-engineer their product portfolios and pricing strategies to survive this permanent resource squeeze. Until silicon foundries can expand their global manufacturing capacities, the era of affordable, high-performance consumer hardware is officially over.
