For the fifth quarter running, fewer phones left Chinese warehouses than a year earlier. Shipments fell 4.3% to 66 million units in the second quarter, according to figures published on Tuesday by IDC, as manufacturers raised prices to cover the rising cost of memory and other components.
First-half shipments were down 4.2% on the same period last year. A run that long stops looking like a soft patch and starts looking like the shape of the market. But, only two vendors grew. Huawei shipped 19.4% more phones than it did a year ago, and Apple 24.4%, giving them 22.6% and 18.1% of the market respectively.
Everyone else went backwards. Xiaomi, in fifth place, saw shipments fall 21.7%, while Oppo and Vivo were down 9.7% and 11.4%. What separated the winners from the rest was not a product cycle, it was nerve on pricing.
“Huawei and Apple held their prices steady while competitors were raising theirs, and that gave hesitant buyers a reason to go ahead and purchase in a quarter when most of the market was giving them a reason to wait,” said Arthur Guo, a senior analyst at IDC China.
The reason competitors were raising prices at all sits a long way from the shop floor. DRAM prices have surged as the handful of firms that make nearly all the world’s memory divert wafer capacity towards the high-bandwidth parts that AI accelerators consume, leaving the phone industry to bid for what is left.
Budget handsets take the hit first, because a cheap device has the least margin in which to hide a component that has doubled in cost. The result is an AI boom quietly eating the entry-level phone, one bill of materials at a time.
Most Android vendors responded by lifting prices or thinning out their budget lines, IDC said, which is an efficient way to persuade a price-sensitive buyer to keep the phone already in their pocket. The fading effect of government subsidies removed the other prop that had supported demand in earlier quarters.
None of this is confined to China. IDC now expects worldwide smartphone shipments to fall 13.9% in 2026 to 1.09 billion units, which would be the steepest annual contraction the industry has recorded, with China itself down by roughly 13% over the year.
The first quarter had already pointed this way. Shipments in China fell 3.3% between January and March, with Huawei and Apple again the vendors holding the market up, and rival tracker Omdia recording a 1% decline over the same period as costs pushed device prices higher.
That global figure is itself a downgrade. IDC had forecast a 12.9% decline as recently as February, and the extra point of contraction is attributed largely to low-end Android vendors struggling to make the maths work in the new cost environment.
Apple’s run in China, meanwhile, is not new. Its shipments rose around 20% in the first quarter on Counterpoint’s numbers, the fastest growth among the major vendors, and the second quarter extended the streak rather than starting it.
Xiaomi’s 21.7% drop is the sharpest among the majors, and it arrives at a company whose investor narrative has lately been carried by its electric vehicle deliveries rather than its handsets. Oppo and Vivo, both heavily exposed to the mid-range, fell by less but from a similar squeeze.
Nobody in the top five has publicly blamed memory alone, and the vendors have said little on the record about their pricing. The pattern in the shipment data, though, is hard to read any other way: the two companies that did not move their prices are the two companies that sold more phones.
Relief, when it arrives, will arrive from fabs rather than from marketing. Memory makers are racing to add capacity, and Seoul has been in talks with Samsung and SK hynix about a second domestic chip cluster, though most forecasts put meaningful new supply no earlier than late 2027.
Until then, the Chinese market is a test of who can hold a price; Huawei and Apple did it for one quarter. The third-quarter numbers, due in the autumn alongside the next iPhone cycle, will show whether that was a strategy or a moment.
