Omdia: Global smartphone market expected to shrink 12% in 2026, market structure to shift toward higher price bands.

Omdia's latest research shows that the global smartphone market is expected to decline 12% year-on-year in 2026, with shipments falling to 1.097 billion units. This is mainly due to weak demand for entry-level devices and purchasing power challenges in emerging markets weighing on shipments. Despite the shipment decline, the total global smartphone market shipment value is expected to grow 12% to $651.6 billion, while the average selling price (ASP) will rise 27% to $594. At the same time, the price band structure of the global smartphone market is undergoing significant changes. The share of smartphones priced below $200 in global shipments will fall from 40.6% in 2025 to 25.6% in 2027, a decline of about 15 percentage points over two years. During the same period, the market share of high-end smartphones priced at $800 and above is expected to rise from 21.1% to 28.4%; the global smartphone ASP will rise from $467 to $624, an increase of 33%. This shift is occurring simultaneously across multiple price bands. The share of the ultra-low-end segment below $100 is expected to drop sharply from 12.6% in 2025 to 3.0% in 2027; products priced between $100 and $199 will fall from 28.0% to 22.6%. Mid-range smartphones priced between $200 and $699 are expected to maintain a market share of about 40% to 41%; while models priced at $700 and above are expected to account for about one-third of global shipments. Jusy Hong, Senior Research Manager at Omdia, said: "We are seeing a clear change in the global smartphone price pyramid. The bottom of the market, which had a massive base of affordable products, is narrowing, while the share held by the high-end price band is expanding. By 2027, the share of high-end shipments above $800 is expected to exceed the total of smartphones below $200. These changes now underway are likely to affect smartphone product portfolios, pricing strategies, and consumer choices over the longer term." Omdia points out that five structural factors are driving this transformation: lengthening smartphone usage cycles, the continued expansion of the second-hand and refurbished smartphone market, intensifying consumer budget pressure, manufacturers placing greater emphasis on profitability while pursuing scale, and the increasing maturity of smartphone technology. Together, these factors are shaping the size and composition of the global smartphone market. Smartphone usage cycles lengthen, slowing replacement demand Smartphone replacement cycles are breaking through past historical levels and are expected to continue lengthening through 2027 and beyond, reducing annual demand for new devices. Moves by major manufacturers to continuously extend software support commitments are also changing the value proposition of products, and compared with lower-priced devices with shorter support cycles, the long-term value of high-end smartphones may thus be further enhanced. Improvements in smartphone performance have also reduced the urgency for consumers to upgrade their devices. Older flagship models can still provide an excellent user experience, while advances in battery technology and growing consumer environmental awareness are prompting replacement cycles to lengthen further. As consumers use their smartphones for longer, annual replacement demand may also decline accordingly. The second-hand and refurbished smartphone market continues to expand The second-hand smartphone market, including used and refurbished devices, had already been growing continuously, and rising prices for new devices have further driven this trend. Previous-generation high-end flagship products can offer consumers an alternative at a similar price level. Trade-in, official refurbishment, and second-hand resale programs launched by Apple, Samsung, and major carriers are also driving the development of this market. These programs usually include device inspection, parts replacement, warranties, and discounted pricing, enabling more consumers to purchase high-end smartphones at lower cost. Apple's leasing program in the United States may further drive this trend, allowing it to play a more direct role in device recovery and residual value management. Rising component costs intensify purchasing pressure in emerging markets Rising component costs are further intensifying pressure on consumers' purchasing power. The share of smartphones priced below $200 in shipments is expected to fall from 40.6% in 2025 to 25.6% in 2027, a decrease of 15 percentage points over two years. Shipments of ultra-low-end smartphones priced below $100 are expected to decline 81%. This pressure is especially evident in emerging markets, because the growth rate of local consumers' purchasing power has not kept pace with rising device prices. In Africa, India, Southeast Asia, and Latin America, higher smartphone prices may make it difficult for a large number of potential consumers to afford new devices. As a result, installment payment and subsidy programs are becoming increasingly important in supporting smartphone purchases. But their actual effectiveness varies by market, especially in countries with lower consumer credit coverage. Manufacturers place greater emphasis on profitability and product portfolio quality Smartphone manufacturers are placing greater emphasis on profitability and product portfolio quality, and some are reducing their investment in the low-profit entry-level market. In some cases, this means manufacturers are willing to accept lower shipments in exchange for a healthier product portfolio and stronger financial performance. "The strategic balance is shifting," Hong added. "Manufacturers are increasingly focused on sustainable growth, healthier product portfolios, and stronger profitability, rather than simply pursuing market share." Mid-range product innovation narrows the performance gap with flagship models Smartphone technology is gradually maturing, and many performance improvements have shifted from breakthrough upgrades in the past to incremental improvements. Today's mid-range processors can already deliver the performance that only flagship devices once had, reducing the need for consumers to upgrade devices solely for performance. At the same time, mid-range smartphones increasingly feature capabilities that were previously concentrated mainly in high-end products. Computational photography continues to improve the shooting experience, and high-refresh-rate OLED displays have also gradually become common in mid-range products. Battery life, charging speed, and build quality are also continuing to improve across price bands, further narrowing some of the practical experience gaps between mid-range and high-end devices. Strategic outlook for the smartphone industry These five factors are highly interconnected. Long device usage cycles will increase the supply of devices available for circulation in the second-hand market, while purchasing power pressure will strengthen consumer demand for lower-cost alternatives. At the same time, technological maturity reduces the urgency for consumers to upgrade devices, and manufacturers' greater emphasis on profitability may further affect the supply scale and market positioning of entry-level smartphones.