smartphone

Apple increases production by 21%

TrendForce’s latest figures reveal that global smartphone production reached around 284 million units in the first quarter of 2026, marking a 1.7% YoY decline. Despite a sharp rise in memory prices since the second half of 2025, the effect on production was minimal because brands still held inventories of cheaper memory components. Additionally, consumer expectations of higher prices in the future have helped sustain short-term demand, cushioning the impact of rising memory costs on production during the quarter.

However, as low-cost memory supplies are gradually exhausted and significant ongoing increases in memory prices reduce profits, most smartphone brands have begun adjusting production in the second quarter.

Looking ahead, TrendForce forecasts global smartphone production to decline approximately 16.2% YoY to 1.051 billion units in 2026. Under a more severe scenario, the annual decline could become even more pronounced if memory price increases remain elevated and brands are forced to raise retail prices repeatedly.

TrendForce notes that Samsung is relatively well-positioned to withstand the current cost inflation cycle thanks to strong financial backing from the broader Samsung Group and a sizable premium product portfolio. Nevertheless, its significant exposure to lower-end models remains a concern—particularly amid weakening consumer sentiment—making end-market demand a key factor to monitor.

Apple ranked second with its production of approximately 60.2 million units during the quarter. In addition to ongoing production ramp-up for new iPhone models, output was supported by the launch of the iPhone 17e, resulting in 19.7% YoY growth.

Compared with competitors that have already entered a margin-protection phase, Apple remains better positioned to absorb higher memory costs while maintaining profitability. TrendForce believes Apple is more likely to prioritize market share expansion during the current downturn as it lays the groundwork for future growth in recurring software and services revenue.

Xiaomi, Oppo, and Vivo focus on preserving profitability as production plans face greater uncertainty

First quarter production declined seasonally among the major Chinese smartphone brands, including Oppo (29.5 million units), Xiaomi (26 million units), and Vivo (22 million units). These three brands ranked third through fifth globally by production volume.

While all three delivered strong market share gains in previous years, surging memory costs are now weighing heavily on profitability, creating significant uncertainty around their 2026 production plans. As a result, production targets may be revised downward if cost pressures persist.

Transsion produced approximately 19.8 million units in 1Q26, roughly flat compared with the same period last year, placing sixth among global smartphone brands.

The brand has been particularly vulnerable during the current memory price supercycle given its smartphone portfolio is heavily concentrated in entry-level and budget segments—where profit margins are already thin. Limited access to low-cost component inventories has further amplified the impact.

Source: TrendForce

NB: Counterpoint tracks sales, Trendforce tracks production. The production data may include inventory build-up not shown in sales while sales may include drawdowns not shown in production. The two analyses however agree on a market under significant supply-side stress. Profitability is a big concern and availability of components is critical. As noted previously in response to Counterpoint reports, the 2026 full year volumes will probably show the worst decline in decades.

Don't confuse efficiency and effectiveness

Apple has cumulatively shipped over 450 million Apple Intelligence-capable iPhones till Q1 2026.

Apple has the largest number of smartphones with consumers which are capable of GenAI as compared to any other brand.

At WWDC ‘26, Apple needs to deliver a revamped Siri showcasing practical use cases, making a strong statement.

Although iPhone sales remain strong, competition is already moving ahead in terms of AI, and Apple must be ready to follow since Agentic AI has the potential to redefine the smartphone industry.

Source: Counterpoint Research

NB: Words like "needs", "must", "follow" contrast with minimal evidence of demand.

Effectiveness is a number. Efficiency is a ratio. No bank has ever accepted a ratio as a deposit. Counterpoint continues: "Although the lack of a more fully AI-featured Siri…

AI-driven memory shortage continues to hammer sales; Android sales to drop 20%

According to analysis firm IDC, smartphone shipments are headed for a 13.9% decline in 2026, a downward revision from the 12.9% decline IDC had anticipated for the year in February. It would also mark the steepest drop in smartphone history, the company said.

“these pressures are compelling vendors to reduce shipments, raise prices and concentrate on higher price tiers — elevating smartphone [average selling price] to a record $550, up $100 from last year,” IDC senior research director Nabila Popal said in a statement.

“2026 will be a defining year for the industry as [a] new reality of structurally higher costs take hold,” she added. “For consumers, it means the era of ultra-cheap smartphones is over. For vendors, it means only those that can adapt their strategies to this new cost environment and sustain demand at elevated price points will survive.

The broader Android smartphone market is set to take the biggest hit, with IDC projecting a 20% year-over-year drop in shipments. Despite that, Samsung is expected to increase its market share in the space at the expense of smaller smartphone companies thanks to its midrange and premium device lineups.

Apple, the research firm said, is also expected to perform relatively well, with shipments forecast to fall 5.2% on the year, an improvement from a previously anticipated decline of 8.1%.

In its most recent earnings report, Apple announced iPhone revenue growth of 20% for the second consecutive quarter, thanks to its strong iPhone 17 lineup and improved sales out of China.

But CEO Tim Cook also warned of supply constraints due to both the memory shortage and the dearth of iPhone processors.

See also: The Smartphone Market is Cracking.

Source: Yahoo Finance

NB: I would add that Apple also announced that revenues for June quarter would increase at the same rate as they did for March quarter, thus for at least half the year the company will achieve 20% growth in iPhone sales. This is in sharp contrast to both what IDC and Omdia have been reporting.

Market contraction expected for second half of year.

Omdia reports that Europe (ex. Russia) smartphone market grew 2% to 33 million units in 1Q26.

Key vendor highlights from 1Q26 include

Samsung was Europe’s largest vendor as it grew 3% to 12.6 million units. Effective discounting of the Galaxy A16 4G helped Samsung boost volume, offsetting declines related to the delayed launch of the Galaxy S26, A57 and A37.

Apple grew 9% to 8.8 million iPhones, driven by robust iPhone 17 series demand in addition to benefiting from a wider mid-range coverage from the iPhone 15 and iPhone 16e. Noticeably, Apple’s strong results came despite lower and fewer discounts than in previous years.

Xiaomi retained third place despite declining 15% to 4.5 million units, as it was more immediately impacted by supply-side difficulties. However, Xiaomi’s ASP grew 21% compared with 1Q25, boosted by a record-strong Xiaomi 17 and 15T series performance, which drove year-on-year value growth despite the shipment decline. Premium sales were particularly strong in France, Germany, and Spain.

Motorola grew 17% to 1.9 million units, driven by rapid expansion in Spain and Portugal, alongside continued progress in France and Italy.

OPPO grew 9% to 1.3 million units, largely driven by its comeback in France alongside growth in Romania and Poland. With both realme and OnePlus now under its umbrella, OPPO is restructuring to optimize its portfolio and strategy with ambitions to strengthen its European position.

HONOR, ranking sixth, was the fastest-growing vendor among the largest players, with shipments increasing more than 60% compared to 1Q25. HONOR’s growth is underpinned by its portfolio being expanded further down the price-tiers.

Source: Yahoo Finance

"The average-selling-price (ASP) of smartphones in Europe surged to a record-high level of €580 in 1Q26," added Bjorhovde. "This was largely caused by lower availability of devices costing less than €200, which made up an all-time low of just 25% of shipments. Additionally, the high-end remained resilient thanks to Apple’s growth. The focus from both vendors and channel partners has shifted from volume to value to deliver results and operational sustainability. Many vendors who normally focus on the mass market segments are increasingly concentrating on the mid-to-high-end, hoping to benefit from less price-sensitive and upgrade-willing buyers."

[My emphasis]

"The first quarter of 2026 delivered beyond expectations, but the outlook remains bearish as the rapidly escalating memory bottleneck worsens," commented Bjorhovde. "Omdia forecasts shipments into Europe to decline 12% in 2026, but the majority of this will come in the second half of the year.

Applying average pricing per vendor and average gross margins gives the following picture of the market:

Apple currently captures 26% of unit volume, 43% of ...

Android down 14.4%. Small players getting crushed.

Apple’s quarter one (Q1) 2026 iPhone sales volume in the US was up 1.3% year-over-year (YoY), outperforming the country’s overall smartphone market.

That market declined 5.7% YoY, according to Counterpoint’s US Monthly Smartphone Channel Share Tracker. Apple’s share of volume grew by 4% YoY, as Android device sales declined 14.4% YoY.

On the impact of the delayed launch,Graham said, “The premium smartphone space in the US is highly consolidated compared to some other markets, with Apple, Google, Samsung and, to some extent, Motorola comprising the vast majority of sales here. When one brand delays a flagship launch, it opens a window of opportunity to fill that vacuum. Apple did just that.”

Apple grew its market share in each of the Big 3 US carriers. Its share grew the most at Verizon to 77% in Q1 2026.

“If Apple can avoid significant price increases and continue to outpace its peers in promotional dollars, it will be tough for Android manufacturers to keep up in the year ahead, said Klaehne.

Source: Counterpoint Research

NB: What are the dynamics of the US market? The split between Apple and the rest of the market seems to be starker than ever. It's ask if there is a K shaped market emerging…

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.

Concentration into top 10 now highest ever.

Apple’s iPhone 17 was the world’s best-selling smartphone in quarter one of 2026, capturing 6% of global unit sales, according to Counterpoint Research’s latest Global Handset Model Sales Tracker.

The iPhone 17 Series captured the top three spots, while Samsung Galaxy A Series was most represented with five models in the top 10. The top 10 smartphones contributed 25% of global unit sales, the highest quarter one concentration ever, according to Counterpoint. This was driven by sustained demand for the iPhone 17 series, alongside pressure on Android manufacturers in mass-market segments as the ongoing memory shortage pushes up component costs, adds the research group.

Source: Apple World Today

NB: There are over 450 brands and over 6000 phone models in the market yet 10 models from 3 brands make up 25% of sales. The near future is harsh…

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Asymco Bulletin is a digest of all the work we have published for the week ending May 3, 2026.

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Office Hours

Asymco Office Hours — Apple Fiscal Second Quarter 2026 Review: The Presentation

In Asymco One's May 1, 2026 Office Hours session, review of Apple's Q2 2026 earnings, segment growth: iPhone at 22%, Services at 16%, iPad at 8%, Mac at 5.7%, and wearables at 5%. Steady, foundational growth of Services, Gross margins reached nearly 50%, R&D spending surged, a shift in Apple's capital return strategy showing perhaps the hand of John Ternus. Guidance suggests 16% revenue growth, 22% EPS growth. Analyst sentiment turned positive post-earnings, with most price targets rising above $310. Apple's evolving identity as an engineering-centric company was the focus of many questions. →

Research

Expectations for the Quarter

Revenue and EPS consensus, year-ago results and my expectations Yahoo Finance Yahoo Finance’s revenue estimate for Apple in Q2 stems from 31 analysts. As of April 25, the average estimate is $109.69 billion, with a low of $107.08 billion and a high of $115.37 billion. For the earnings per share estimate, 32 analysts put it at an average of $1.95. The low is $1.56 and the high is $2.16. TipRanks TipRanks also does its own analyst polling on Apple’s quarter. In its forecast as of April 19, its consensus is for a revenue of $109.45 billion, with a high of →

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Nota Bene

The Economist Interview: Hints at the future direction of the company → As is often the case, a 45 minute discussion turns into two sentences. The article sadly does not provide hints at the future direction of the company. But we can…

TD Cowen: 15% revenue growth, 10% growth guidance → Apple is projected to gain market share in both smartphones and PCs, driven by strong iPhone 17 demand and the new MacBook Neo, with anticipated revenue growth of over 15% in Q3 and positive sentiment ahead of earnings.

UBS Raises Price Target from $280 to $287 but Maintains Neutral Rating → Apple's fiscal Q2 shows promise with iPhone strength and solid Mac demand, especially for the budget-friendly Neo and AI-capable Mac mini, potentially boosting earnings beyond expectations.

Morgan Stanley forecasts fiscal second-quarter EPS of $1.74 → Despite memory pricing pressures, Apple's strong iPhone sales, potential AI and foldable iPhone announcements, solid free cash flow, and favorable market conditions position it for better-than-expected earnings and a possible stock rise to $300 by September.

Is Apple borrowing Samsung’s Market Expansion Strategy? → Bernstein SocGen maintains optimism on Apple's strategic pricing and ecosystem strength, forecasting EPS growth and potential market share gains, while Samsung faces smartphone profit challenges but thrives in memory.

Separately, it’s been reported that Samsung might see its first operation loss from its phone division, resulting in Apple capturing 100% (or more) of global smartphone profits. Simultaneously, Samsung is seeing huge profit gains from memory, even overtaking Nvidia’s profitability. This is remarkable…

Apple share of the smartphone SoC market grew from 15% to 19% in Q1 → In Q1 2026, global smartphone SoC shipments fell 8%, but Apple thrived in the premium market by leveraging its efficient supply chain and passing costs to consumers, boosting its market share from 15% to 19%.

Google to sell TPU chips as Gemini shows returns → Why pour cash into Nvidia when you can craft your own cutting-edge chips like Google, and then turn that innovation into a lucrative side hustle by selling them to tech giants like Meta and Anthropic?

The Vision Products Group Expanding → Gurman's 2025 dissolution claim clashes with 2026's active Vision Products Group hiring spree. The Vision Products Group posted 14 new senior roles last week.

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Supply disruptions strengthen the strongest

Global smartphone system-on-a-chip (SoC) shipments declined 8% year-over-year (YoY) in quarter one (Q1) of 2026, according to Counterpoint Research’s latest Global Smartphone SoC Shipments Preliminary View report. However, it’s good news for Apple.

Counterpoint says the premium segment has remained relatively resilient, with higher costs largely passed on to end consumers. Meanwhile, the entry-level manufacturers are increasingly adopting lower-cost chipsets to keep smartphone prices competitive.

Qualcomm and MediaTek recorded double-digit declines in shipments. In contrast, Apple, Samsung, Google and UNISOC posted positive growth.

Apple saw its share of the global smartphone SoC market grow from 15% in the first quarter of 2025 to 19% in the first quarter of 2026. Some explanation: A smartphone SoC (System-on-a-Chip) is a single, integrated chip that combines all essential computing components—CPU, GPU, memory, and connectivity modems (5G/Wi-Fi)—into one unit.

Apple silicon is a series of proprietary, ARM-based systems-on-a-chip (SoCs) designed by Apple for its ecosystem, providing high-performance computing through a unified memory architecture and specialized components. They power iPhones (A-series), Macs (M-series), iPads, and wearables (S-series), focusing on superior power efficiency and security.

Source: Apple World Today

NB: Counterpoint Senior Analyst Shivani Parashar says that their integrated supply chains helped …

On March 18, 2026, Bernstein SocGen Group reaffirmed its “Outperform” rating and $340 price target for Apple Inc.

Comparing it to Samsung’s 2009–2013 strategy, which saw Samsung increase its global smartphone share from 4% to 32% in Q3 2013, Bernstein emphasized Apple Inc.’s recent product launches as a strategy to widen portfolio price bands, driving share gains at the low end while raising prices at the high end to maintain margins. Although Samsung eventually lost market share to Chinese manufacturers, the firm said the stickiness of Apple’s iOS ecosystem will help it sustain long-term market share.

Bernstein projected a 12% increase in fiscal 2027 EPS from share gains, split equally between hardware and services, assuming Apple Inc. captures 10% of Chinese manufacturers’ smartphone market share amid their supply issues. Some noteworthy product developments include the introduction of the $549 AirPods Max 2, the App Store cost reduction in China from 30% to 25%, and plans for a foldable iPhone.

Source: Yahoo Finance

NB: Separately, it's been reported that Samsung might see its first operation loss from its phone division, resulting in Apple capturing 100% (or more) of global smartphone profits. Simultaneously, Samsung is seeing huge profit gains from memory, even overtaking Nvidia's profitability. This is remarkable…

Share gains in both smartphones and PCs

TD Cowen analyst Krish Sankar reiterated a Buy rating and a $325 price target on AAPL stock. He expects Apple to report over 15% year-over-year revenue growth for the March quarter and to guide June-quarter revenue up about 10% year-over-year, driven by healthy iPhone 17 demand and the new MacBook Neo.

Key watch items: Apple’s ability to manage memory cost inflation and the launch of a compelling AI‑powered Siri. Sankar believes Apple will continue gaining share in both smartphones and PCs, with sentiment already positive heading into earnings.

Apple is set to report earnings on April 30. Currently, analysts expect AAPL to post revenue of $109.45 billion in fiscal Q2, up from $95.36 billion in the year-ago quarter. Further, the company is expected to report earnings of $1.95 per share, compared with earnings of $1.65 in the prior-year quarter.

Source: TipRanks

NB: Consensus building that memory crunch will be neutral to positive.