Goldman Sachs Trims Global Smartphone Market Forecasts on High Memory Costs

Goldman Sachs has revised down its global smartphone shipment forecasts for 2026 and 2027, attributing the adjustment to the persistent rise in memory chip prices. The investment bank anticipates significant pressure on demand, particularly in the lower-end segments, as the artificial intelligence (AI) industry's robust demand for memory components diverts supply and drives up costs. This trend is compelling smartphone manufacturers to absorb higher expenses or pass them on to consumers, leading to extended device upgrade cycles.

According to Goldman Sachs' latest research, global smartphone shipment volumes for 2026 have been reduced by 4%, and for 2027 by 3%, bringing the estimates to 1.14 billion and 1.17 billion units, respectively. This implies a 10% decline in 2026, followed by a 3% growth in 2027. The primary catalyst for the escalating memory chip costs is the outsized demand for high-bandwidth memory (HBM) chips from the AI industry. Chipmakers are prioritizing the production of these high-margin AI-specific memory components, thereby constraining the supply of standard DRAM and NAND memory used in consumer electronics.

Memory chips constitute a substantial portion of the Bill of Materials (BOM) for smartphones, especially for more affordable models, exacerbating the impact of price increases. Reports indicate that memory components can account for over 30% of the BOM in some entry-level phones. This has led to price hikes of over 50% for some entry-level devices priced below $200. Price-sensitive consumers, particularly in emerging markets, are consequently delaying device upgrades, and there's a noticeable increase in demand for refurbished smartphones.

Despite the reduction in unit volumes, the total value of the smartphone market is projected to continue growing. Goldman Sachs forecasts the market value to rise by 3% to $596 billion in 2026, followed by 2% increases in 2027 and 2028, reaching $606 billion and $621 billion, respectively. This growth is primarily driven by a shift towards more expensive premium devices and an increase in average selling prices (ASPs). Sales of premium models (priced above $600) are expected to grow at a compound annual rate of 5% through 2028, eventually accounting for 34% of the total market volume.

This development is part of a broader trend within the semiconductor and technology sectors. The AI-driven memory chip supercycle is anticipated to persist until at least 2028, ensuring that memory prices remain elevated. Goldman Sachs has raised its price targets for memory manufacturers like Samsung (005930.KS) and SK Hynix, while noting that chipmakers such as Qualcomm (QCOM) are striving to offset smartphone-related headwinds by diversifying into areas like automotive and data centers.

Analysts and market expectations suggest that the smartphone market will increasingly prioritize value over volume in the coming years. Goldman Sachs predicts that the mid-range segment (priced between $200 and $600) will shrink by 2% annually, while the entry-level segment, though potentially seeing modest growth supported by 4G to 5G migration in developing markets, remains most vulnerable to rising memory costs. This scenario is likely to benefit brands with strong premium offerings, such as Apple (AAPL), enabling them to maintain market leadership, while other manufacturers will need to reassess their product portfolios and pricing strategies.