Global smartphone chip shipments fell 15% year on year in the first half of 2026, according to a preliminary report published by Counterpoint Research on 29 July — and the sharpest damage is not in the flagship tier that gets the headlines. It is at the bottom of the market, where Counterpoint expects entry-level SoC shipments to drop by more than 30% this year and where phone makers are already swapping 5G silicon out of cheap handsets to keep the bill of materials down.
Smartphone chip shipments fell hardest at the budget end
MediaTek and Qualcomm, the two vendors that between them supply most of the Android world, each shipped more than 25% fewer chips than in the first half of 2025. Counterpoint’s own share chart puts MediaTek at 32% of global SoC shipments, down from 37%, and Qualcomm at 22%, down from 26%. Apple climbed from 15% to 19% on iPhone 17 demand, UNISOC from 11% to 13%, and Samsung’s in-house silicon from 5% to 8%.
Qualcomm’s slide is partly a Samsung story: the Galaxy S26 series split between the Snapdragon 8 Elite Gen 5 and Samsung’s own Exynos 2600, where the previous generation ran on Qualcomm silicon throughout. Counterpoint also points to softer Xiaomi 17 sales. MediaTek’s premium Dimensity 9500 series is doing fine on design wins with vivo, OPPO, Poco and Redmi; it is the low-end and entry-level 5G parts that collapsed.
What this means for a cheap Android phone
The reason is memory, not processors. Smartphone memory prices rose more than 300% year on year in Q2 2026, and Counterpoint says memory now costs more than the SoC itself in every price segment — the same cost surge behind Qualcomm’s double-digit Snapdragon price increase from 1 September. In the entry-level tier there is no margin left to absorb that, so the chip is where the saving gets made — and Counterpoint says that is already pushing models back onto 4G platforms.
“Many entry-level smartphone models are migrating to UNISOC’s 4G platforms in efforts to reduce BoM costs, helping UNISOC achieve growth in H1 2026. Additionally, UNISOC is making significant progress in 5G adoption through partnerships with Pocophone and Redmi.”
That is Senior Analyst Shivani Parashar in Counterpoint’s report, and it is the line worth sitting with. For buyers in India, Indonesia, Brazil and other large markets where the entry tier is the market, the practical consequence is that a budget phone at a familiar price point can come back this year with a 4G modem where its predecessor had 5G. Nothing about that gets advertised as a downgrade. The spec sheet simply says less, and it is on the buyer to notice.
The AI tier is the one still growing
Set against the 15% overall drop, shipments of SoCs Counterpoint classifies as GenAI-capable grew 24% year on year, which the firm attributes to demand for AI features and continued premiumisation in the mid-high, premium and flagship tiers. Read plainly, that is the industry’s cost problem and its marketing priority pointing in opposite directions: the parts of the market that can absorb a price rise are being served with more silicon, and the parts that cannot are being served with less.
How long this lasts
- Full-year 2026 forecast: global smartphone SoC shipments down 14% year on year.
- Entry-level 2026 forecast: down more than 30% year on year, the worst-hit segment.
- Memory supply: Counterpoint does not expect it to normalise before the second half of 2027, and warns 2027 could be another difficult year for the industry.
That timeline matters more than the shipment figures. It means the price and specification pressure showing up now is not a one-quarter blip to wait out — anyone buying a budget Android phone between now and late 2027 should check the modem generation and the RAM on the specific variant they are buying rather than assuming this year’s model matches last year’s at the same price.
Sources: Counterpoint Research
