(Yicai) Aug. 28 -- Several industry reports have predicted that widespread smartphone price increases due to rising storage and chip costs will likely result in a significant decline in shipments this year.

Global phone shipments are expected to exceed one billion units this year, down nearly 17 percent from last year, according to a report released by International Data Corporation on Aug. 26. This is a downward adjustment from IDC’s 14 percent decline prediction made in the second quarter.

Counterpoint Research earlier forecast that smartphone shipments will fall 14 percent this year and 1.4 percent next year, as challenges are expected to persist.

The average selling price of smartphones globally will surge almost 28 percent to USD581 in 2026 from last year, according to IDC’s latest prediction.

In China, the average price of the best-selling smartphone models of Honor, Xiaomi, Vivo, Oppo, Huawei, iQOO, Samsung, Lenovo, and Apple on their flagship stores on Taobao over the past 60 days was higher than their lowest price in the past 13 months by an average of CNY688 (USD102), according to data from third-party platform Manmanbuy.Com compiled by Yicai yesterday.

Some models even doubled in price in the past 60 days. For example, the Xiaomi Redmi Note 14 5G was on sale at CNY725 on Taobao on Aug. 12 last year, compared with an average price of CNY1,405 (USD209) in the past 60 days. The average selling price of the Oppo K12S 5G in the past 60 days was CNY1,262, up from CNY608 on Oct. 24 last year, during the Double 11 shopping festival.

The cost pressure from rising memory prices is evident, with almost all smartphone models across different price segments being more expensive now than last year, Ivan Lam, senior analyst at Counterpoint Research, told Yicai.

Notably, phones priced below USD150 have been the most affected, as profit margins in this segment were already limited, and the target consumer group is more price-sensitive, Lam noted. Since Chinese brands hold a large share of this market segment, they have been relatively more impacted, he added.

"The era of the cheap smartphone has ended," said Francisco Jeronimo, vice president for worldwide client devices at IDC. “From here, the winners will be the vendors with the scale and supply leverage to hold demand at prices consumers have never had to pay before.”

As memory prices are expected to continue increasing until at least 2028, vendors are adapting their portfolios to a permanently higher cost structure, IDC said. The smartphones priced below USD100 are facing an existential crisis, it noted, adding that Android players focused on low-end devices, which were already operating on razor-thin margins, are cutting low-end models and pushing a higher-end product mix.

While the new smartphone market struggles, opportunities are opening for the second-hand market. Recycling prices for used phones showed a structured upward trend this year, according to data from several second-hand platforms. The average price increase was around 10 percent for mid-to-low-end Android models.

Against the backdrop of rising storage prices, the second-hand smartphone market has gained momentum, Lam said, adding that growth in used phone sales this year is roughly comparable to the decline in that of new phones. He expects the pressure in the new phone market to persist next year.

Editor: Futura Costaglione