Samsung, Apple Outpace Rivals as Global Chip Shortage Hits Smartphone Market

A global shortage of low-power DRAM (LPDDR) chips is reshaping the smartphone industry, creating supply constraints that are hitting several manufacturers unevenly. LPDDR is a critical component used in mobile devices, and the current crunch is tightening production capacities worldwide.

According to a report by The Korea Herald, global smartphone shipments declined 4.1 per cent year-on-year to 289.7 million units in the first quarter, marking the first January-March drop since 2023. This broader slowdown highlights how deeply the supply issue is affecting the market.

Why are Samsung and Apple performing better than competitors?

Despite the downturn, Samsung Electronics and Apple Inc. have managed to grow. Samsung led the market with 62.8 million shipments and a 21.7 per cent share, followed closely by Apple with 61.1 million units and a 19.6 per cent share.

They were the only two major brands to record year-on-year shipment growth during the quarter. Their advantage lies in financial strength and tighter control over supply chains, allowing them to secure crucial components even during shortages.

As one industry source explained to news agency ANI, "Apple has both financial firepower and bargaining power, allowing it to secure DRAM supply even at a premium," while adding, "Samsung is also minimizing procurement disruptions through close coordination between its mobile experience division and device solutions division."

How is AI demand worsening the chip shortage?

The shortage is being intensified by rising demand from AI and graphics computing. Nvidia is consuming large volumes of LPDDR memory for its next-generation platforms, including the upcoming Vera Rubin GPU.

This surge in demand from the AI sector is diverting supply away from smartphone manufacturers, tightening availability and pushing up costs across the industry.

Why are Chinese smartphone makers struggling?

Chinese brands such as Xiaomi, Oppo, and Vivo have been hit the hardest. Xiaomi alone saw shipments drop by 8 million units year-on-year, while Oppo and Vivo also lost market share.

Unlike Samsung and Apple, these companies lack strong in-house chip manufacturing capabilities or large-scale prepayment strategies to secure supply.

An industry source described their challenge: "Chinese manufacturers have a high exposure to budget and midrange models, which makes it difficult for them to reflect higher component costs in retail prices. If they raise prices, sales volume could fall. If they keep prices unchanged, profitability suffers. They are caught in a dilemma."

How long will the shortage last?

The supply crunch is not expected to ease soon. Market watchers believe memory prices will remain elevated, with stability likely only by the second half of 2027.

According to the report, "IDC (International Data Corp.) expects the supply shortage to drag global smartphone shipments down by roughly 12.9 percent this year to 1.12 billion units, reaching the lowest level since 2013."

Could this crisis permanently change the smartphone market?

The ongoing shortage may fundamentally alter how smartphone companies compete. For brands heavily reliant on budget segments, such as Xiaomi—which operated at a 10.9 per cent gross profit margin last year—absorbing rising costs is becoming increasingly difficult.

An analyst noted, "This memory shortage could become a turning point that reshapes the competitive order of the smartphone market. In the past, design, cameras and price competitiveness were the key factors. Going forward, the ability to secure core components reliably could determine shipments and market share."

(With inputs from ANI)