The era of high-cost memory is unlikely to end anytime soon, and the global smartphone market is projected to enter an output adjustment period starting in 2Q26. Brands equipped with economies of scale, conglomerate resources, and premium product pricing power are well-positioned to stand out in this elimination race. Conversely, brands predominantly selling low-to-mid-range products must brace themselves for a battle for survival.
Despite continued upward momentum in memory contract prices, smartphone brands are maintaining healthy inventory levels to manage cash flow risks. On the market front, robust AI server demand has prompted Korean and US suppliers to tighten full-year allocations for smartphone clients, leaving consumer supply constraints unlikely to ease in the near term. Korean suppliers' 2Q26 quotes for LPDDR4X, LPDDR5X, and UFS remain sharply elevated, though the pace of price hikes is expected to moderate in 2H26. Elevated costs are eroding brand profitability and pushing up retail prices, with global smartphone production projected to decline over 10% YoY in 2026. Under this pressure, brand strategy divergence is intensifying, and significant shifts in market share are anticipated this year.
Propelled by substantial contract price increases, 1Q26 Mobile DRAM revenue reached an all-time high, with ASP appreciation serving as the core growth engine. From a supply perspective, vendors are channeling resources toward AI and server applications, resulting in a structurally constrained supply outlook for consumer Mobile DRAM over the long haul. Market concentration has intensified, with Samsung, SK hynix, Micron, and CXMT now dominating the landscape. Notably, CXMT has capitalized on its LPDDR4X supply strength to elevate its revenue contribution, cementing the "Big Four" formation. Meanwhile, Taiwan's Nanya and Winbond have reaped short-term gains by filling the void left by tier-1 players withdrawing from legacy nodes and low-density segments. That said, their overall footprint remains modest, with future trajectory highly dependent on pricing dynamics and the pace of new capacity ramp-ups.
Skyrocketing memory prices starting in 2025 are expected to drive a double-digit decline in global smartphone production in 2026, reshaping the market landscape. Leveraging their strong financial positions and high-end market focus, Apple and Samsung are expanding their market shares against the overall downtrend. In contrast, Chinese brands (HOVX), which traditionally compete on high cost-performance ratios, have seen their costs multiply and are forced to drastically cut production to preserve cash flow. Furthermore, Huawei is aggressively capturing market share by relying on its mid-to-high-end positioning and strong ecosystem, further squeezing its peers. Consequently, the overall market share of Chinese brands has dropped significantly, marking a pause in their decade-long expansion.
The surging AI server demand for low-power memory has triggered a severe capacity squeeze. Smartphone brands have lost their procurement bargaining power and are facing high cost pressures. To navigate these structural changes, manufacturers must adjust retail pricing and accelerate hardware-software integration to reduce memory reliance, breaking through in this era of high costs.
In mid-March, Samsung released its 2Q26 quotes ahead of schedule, with price hikes far exceeding market expectations. TrendForce believes this move is primarily aimed at accelerating downward revisions in the consumer end-market to free up production capacity for high-margin and strategic products. The recent softening of spot prices reflects the inability of consumer products to absorb these high costs, resulting in cutbacks to production plans and channel sell-offs to clear inventory. However, the overall reality of the memory supply shortage remains unchanged.
1Q26 Mobile DRAM contract prices were fully finalized in mid-March, with the QoQ increase being the most moderate among all applications. However, to maintain a profitability balance across different applications, TrendForce believes that suppliers are highly likely to initiate a pronounced "catch-up price hike" for smartphones in 2Q26. Under extreme cost pressure, Chinese brands have, in a rare move, begun retroactively raising the retail prices of older models, while non-Chinese majors are facing a similarly severe test in their end-device pricing strategies. Overall, a further downward revision of the total global smartphone production volume for 2026 is virtually inevitable.
AI demands and chip upgrades drive smartphone storage growth despite high costs. Brands raise base specs, making large capacities the new standard.
Mobile DRAM revenue hit new highs driven by surging contract prices, confirming a seller-driven super cycle. Major manufacturers shifting capacity to AI applications has tightened supply, allowing CXMT to expand in mature nodes. Looking ahead, sharp price hikes will boost supplier profits, but high costs are forcing smartphone brands to cut production, leading to a market of rising prices and shrinking volumes.
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