The ‘cheap smartphone era is over’ and price hikes are ‘permanent,’ bleak forecast reveals

Higher smartphone prices are set to remain "permanent," according to the latest analyst forecasts amid a record drop in shipments. IDC predicts a 16.7% decrease in global smartphone shipments year-over-year, a significant shift from the initially anticipated 14% drop. The second half of 2026 will see the most severe impact, with over 200 million fewer smartphones shipped compared to previous years.

The rising cost of memory chips, expected to persist until at least 2028, will continue to drive up smartphone prices. Even after 2028, average selling prices are projected to increase by only 1-2% annually, leading to more expensive next-year models. This trend is especially detrimental to low-end devices, which are becoming increasingly scarce as manufacturers prioritize higher-end models with thinner profit margins.

Low-cost smartphones below $100 have faced an "existential crisis" due to shrinking demand. Android players targeting budget devices, already operating with thin margins, are discontinuing low-end models and shifting focus to higher-priced offerings. In Q2 2026, this segment experienced a nearly 60% YoY decline, and this trend is expected to accelerate during the second half of the year.

Premium smartphones are more resilient to price hikes, as long-term interest-free financing options are more widespread in developed markets like the US and UK. However, the mass market, particularly in emerging economies, is expected to decline by over 20% this year, exacerbating the unit decline while the value line continues to rise.

The next 18 months will determine which vendors can thrive in a more expensive market and which cannot. Industry giants Apple, Samsung, and Huawei possess the scale and pricing power to navigate these challenges advantageously. Meanwhile, smaller Android brands focused on the entry-tier market face an arduous journey, with some likely failing altogether.

When memory supply stabilizes in 2028, the surviving market will be smaller in units, larger in value, and more concentrated at the top. The "cheap smartphone era" appears to be concluding, with foldables poised for growth. Apple's entry into the foldable market is expected to contribute to this expansion, with its upcoming foldable anticipated to be announced soon. Despite recent Pixel price hikes, this appears to be just the beginning of a new pricing reality.