Morgan Stanley has lowered its 2026 global smartphone shipment forecast by 15% to 1.1 billion units, citing a severe memory chip shortage that is expected to drive up production costs and suppress demand across major markets. The bank warned that rising component prices could particularly hit the Android market, where consumers are more price-sensitive.
According to the research note published on March 22, smartphone manufacturers are expected to raise average selling prices to offset increased costs. Morgan Stanley forecasts a 16% year-on-year decline in Android shipments, while Apple shipments are projected to fall only 2%, positioning Apple’s supply chain as a relative outperformer. Among Android brands, Xiaomi remains a preferred pick over Transsion Holdings, whose rating was cut to Equalweight. Target prices for AAC Technologies and BYD Electronic were lowered but kept at Overweight, and Sunny Optical was downgraded to Equalweight.
The revised forecast comes amid similar warnings from other research firms. IDC has projected global smartphone shipments to fall 12.9% in 2026 to 1.12 billion units, describing it as the sharpest contraction on record. Gartner expects an 8.4% decline, attributing the slump to a projected 130% rise in DRAM and SSD prices by the end of the year. The shortfall follows a shift by Samsung Electronics, SK Hynix, and Micron Technology toward supplying memory chips for artificial intelligence systems, tightening output for consumer electronics.
Industry sources report that Chinese manufacturers have begun slashing production targets. Xiaomi has reportedly cut its 2026 shipment guidance by up to 70 million units, while Transsion lowered its forecast by as much as 45 million units. Analysts warn that the impact will be most severe in the sub-$100 smartphone segment, which could become commercially unviable before supply conditions stabilize, likely no earlier than 2027.
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