Insight

Shrinkflation or Exit? Tough Choices Ahead for Smartphone Brands in Europe

January 30, 2026

Skyrocketing memory prices are fundamentally impacting the Bill of Materials (BOM) for smartphone manufacturers.
To minimize the impact of these rises, and to reduce the need to pass increased costs onto consumers, OEMs have a tough choice to make – cut the size of their portfolios, lower specifications of new devices (shrinkflation), be more selective in which markets they target, or simply hunker down and wait for the crisis to pass.
However, these strategies may not be realistic or sufficient for low-end or sub-scale OEMs, for whom the impact of price rises will be greatest. These players must position themselves for relevance once the crisis ends, or they may need to exit the European market.

London, Berlin, Beijing, Buenos Aires, Fort Collins, Hong Kong, New Delhi, Seoul, Taipei, Tokyo – Jan 30, 2026

Skyrocketing memory prices are fundamentally impacting smartphone OEMs, particularly low-end manufacturers, for whom Bill of Materials (BOM) costs have risen by as much as 30% since Q1 2025 and will likely rise by another 15% over the next two quarters. In Europe, the largest impact will be seen in the sub-$250 segment, where competition is intense, margins are small and consumers are much more sensitive to price.

Proportion of European Smartphone Sales Under $250 (wholesale), 2025

Source: Counterpoint Research Handset Tracker

Associate Director Jan Stryjak said, “High-end OEMs, like Apple and Google, or those with broad portfolios, like Samsung, are more protected. So, to minimize the impact of the price rises, and to reduce the need to pass increased costs onto consumers, they can either cut the size of their portfolios, lower specifications of new devices (shrinkflation), be more selective in which markets they target, or simply hunker down and wait for the crisis to pass. However, these strategies may not be realistic or sufficient for low-end OEMs, like realme, HMD and Transsion brands, or sub-scale OEMs like SONY and TCL. So, assuming they can last long enough, these OEMs must position themselves for relevance once the crisis ends. But even so, I would not be surprised if the European smartphone market has one or two fewer players once we exit the tunnel.”

Counterpoint Research forecasts global smartphone shipments to decline 6% YoY in 2026, with a meaningful recovery unlikely before H1 2027. Until then, the industry is likely to see a period of adjustment, balancing cost, performance and innovation, before a more stable growth cycle resumes.

About Counterpoint Research

Counterpoint Research is a global market research firm specializing in products across the technology ecosystem. We advise a diverse range of clients – from smartphone OEMs to chipmakers and channel players to Big Tech – through our offices located in the world's major innovation hubs, manufacturing clusters and commercial centers. Our analyst team, led by seasoned experts, engages with stakeholders across the enterprise – from the C-suite to professionals in strategy, analyst relations (AR), market intelligence (MI), business intelligence (BI), product and marketing – to deliver services spanning market data, industry thought leadership and consulting. Our core areas of coverage include AI, Automotive, Consumer Electronics, Displays, eSIM, IoT, Location Platforms, Macroeconomics, Manufacturing, Networks and Infrastructure, Semiconductors, Smartphones and Wearables. Visit our Insights page to explore our publicly available market data, insights and thought leadership, and to understand our focus, meet our analysts and start a conversation.

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