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Since the second half of 2025, the global handset market has experienced increased pressure from tightening memory supply and rapidly rising prices, according to TrendForce’s latest smartphone research. These cost increases have led to higher prices for end products and a decline in consumer demand.
Although major brands have not yet significantly lowered their production plans for 1Q26, TrendForce predicts that the effect of price hikes on newly launched models—introduced to offset increasing costs—will start to significantly impact production performance from the second quarter of this year.
TrendForce observes that despite most smartphone brands being cautious about market outlooks and some reducing their annual production targets, their memory procurement strategies remain unchanged. Brands will keep focusing on securing supply to prevent increased costs or more serious supply shortages in the future.
However, aggressive production and shipment efforts toward the end of 2025, the diminishing impact of China’s subsidies, and weaker-than-expected sales following price increases for new models have resulted in the accumulation of finished smartphone inventories at some leading brands. If retail sell-through does not improve soon, certain brands might start reducing future production plans as early as the end of 1Q26.
The first half of 2026 will be a crucial time for brands to recalibrate their output levels and update product portfolios. They will aim to offset earlier cost increases by revising specifications and adjusting pricing strategies. However, the effects of higher end-product prices on production schedules will not be immediate. Given existing inventories and the time required for production-line adjustments, significant changes to production plans are expected between the second and third quarters of 2026.
TrendForce has lowered its forecast for total smartphone production in 2026 due to a weak macroeconomic environment, more cautious consumer behavior, and steadily rising memory prices. The expected year-on-year decline has increased from 2% to 7% compared to the November 2025 estimate. Future revisions will depend on upcoming memory price movements, how much brands adjust their prices, and the market’s acceptance of higher handset costs.
