Apple accelerates its gains as the smartphone market plunges — who’s to blame?

The smartphone industry is sliding into a downturn and Apple is quietly widening the gap. Global shipments fell in the first quarter as memory prices spiked and capacity was reallocated to AI data centres, squeezing the low‑end model economics that have powered volume sales for years. Who’s to blame? Suppliers, shifting demand and the fallout from a global tech policy landscape that has re‑ordered supply chains all share the responsibility.

Memory squeeze and collapsing volumes

IDC’s preliminary data show global smartphone shipments fell 4.1% in Q1 to about 289.7 million units, while Counterpoint puts the decline closer to 6%. China, the world’s largest smartphone market, also contracted: IDC reports Q1 shipments of roughly 69.0 million units, down 3.3% year‑on‑year. Analysts say memory makers prioritised capacity for AI datacentres over consumer smartphones, and it has been reported that that reallocation, plus sharp NAND/DRAM price rises, pushed memory’s share of low‑end phone BOMs toward 40% or more — forcing brands to raise retail prices or sacrifice margin.

Winners, losers and the shakeout ahead

Not all vendors suffered equally. IDC data indicate Apple’s China shipments grew strongly in Q1, and Huawei (华为) also logged gains, while most domestic mid‑tier and smaller brands were hit hard. The “Others” category in China fell precipitously. It has been reported that some smaller OEMs have paused new‑phone development and narrowed product lines; Meizu (魅族) and realme (真我) were cited as examples of market retrenchment. Meanwhile, the second‑hand market has surged as consumers trade down or delay purchases — a classic demand‑shift in a higher‑price environment.

Outlook: consolidation, pricing pain and geopolitics

Forecasts are bleak: Omdia warns of deeper downside risk for 2026 and beyond, with some scenarios showing double‑digit declines for the year. Geopolitical tensions and trade restrictions have already reshaped chip and memory supply chains, favoring firms with tight supplier relationships and large cash buffers. Apple’s supply‑chain discipline and high‑end positioning have let it accelerate through this turbulence; domestic brands now face a steeper climb to premium. Can Chinese OEMs translate strategy into sustainable high‑end gains, or will the winter hand more market share to incumbents? The next two years should answer that question.