The Smartphone Market is Cracking

Fundamentals are breaking; Profits evaporate; Competitors flee; Android logic questioned

Apple’s revenue climbed 22% YoY in Q1 2026, registering the fastest growth among the top five smartphone brands while also hitting a first-quarter record high. Furthermore, the brand led the global smartphone market in terms of shipments for the first time in a first quarter, capturing a 21% share.

Commenting on Apple’s performance, Research Director Jeff Fieldhack said, “Apple’s growth was driven by sustained demand for the base iPhone 17 and iPhone 17 Pro Max, with a stronger mix of these models lifting Apple’s overall ASP by 11% YoY.

Unlike its peers, Apple mostly maintained stable pricing despite rising BOM costs, reflecting its ability to absorb cost pressures and remain insulated from the memory crisis, which helped strengthen its competitive position during the quarter. Regionally, Apple saw broad-based strength, especially across the Asia-Pacific region, driven by subsidies, promotions, and trade-in offers.”

The global smartphone market’s revenue grew 8% YoY in Q1 2026, driven by strong premium demand and pricing adjustments across major OEM portfolios amid rising Bill of Materials.

The average selling price (ASP) climbed 12% YoY to reach $399, supported by contraction in entry-level segments and price hikes across regions.

Apple led the global smartphone market in terms of value, recording its highest-ever first quarter revenue. Apple was the fastest growing brand with revenue up 22% YoY supported by relatively stable pricing compared to peers, despite broad-based price increases across the industry.

Samsung held an 18% revenue share in Q1 2026, with shipments reaching 21% of the total market, supported by portfolio optimization and strong response for the Galaxy S26 series.

The global smartphone market is expected to remain under pressure through 2026, and a substantial recovery is expected only in late 2027.

Source: Counterpoint Research

NB: The average sales price is up to $399 but Apple, with the largest share and fastest growth, reached $908? There's a lot more that does not make sense.

Apple is also projected to have 45% of revenue share and I reckon nearly 100% of profit share (on an operating margin basis). Samsung, the only substantial brand remaining, is now preoccupied with memory sales, which have allowed it to reach $1 Trillion in market capitalization. Management at Samsung must be asking themselves why compete with Apple on devices when they can make 100x the profit as a supplier of components. Especially as Apple is looking for an alternative to TSMC for fabrication (and flirting with Intel too.)

This all looks like a cornered market to me. That's not to say that capital will not still chase the smartphone dream, especially in China, but the situation is all but hopeless for anybody but Apple. Apple may take a few steps to lock this up next year with new portfolio strategy (e.g. iPhone Neo and Ultra bookends), new launch schedule and new pricing.

Google, meanwhile, is preoccupied with cloud and AI leaving a big question mark above Android. This is a slippery slope of evaporating hardware profits, dwindling platform investments and obsessions with the new shiny thing.

The smartphone market is cracking. It may break altogether next year. Stay tuned.