Global smartphone shipments contracted 11 per cent year-on-year in the second quarter of 2026, the weakest April-to-June performance since 2013, as the vast capital expenditure on artificial intelligence infrastructure began to reshape the consumer electronics supply chain. The decline, reported by Counterpoint Research, coincided with Meta Platforms’ announcement that it would more than double the planned capacity of its Hyperion data centre in Louisiana to 5 gigawatts, pushing the project’s cost above $50 billion. Viewed from Seoul, the figures mark a direct transmission channel: the same memory chips that power AI training clusters are the components now in critically short supply for handset makers.

The mechanism runs through DRAM and NAND flash memory. AI data centres are absorbing an increasing share of global output, with JPMorgan Chase economists estimating that some memory chip prices will have risen as much as 400 per cent between 2024 and the end of this year. Smartphone manufacturers, particularly those dependent on mid-range and entry-level devices, have been forced to raise retail prices or absorb margin pressure. Counterpoint analysts note that the bill-of-materials cost increases have been most acute for brands with heavy exposure to price-sensitive consumers, leading some to extend the sales cycles of older models and reduce new product launches.

Samsung Electronics reclaimed the top spot with a 24 per cent market share, buoyed by relatively moderate price adjustments in key markets such as India and the Middle East, and by strong sales of its Galaxy S26 series. Apple held 20 per cent, the only major original equipment manufacturer not to raise smartphone prices during the quarter, and saw iPhone 17 demand support a 3 per cent shipment increase. Chinese brands bore the brunt: Xiaomi, Oppo and Vivo all recorded double-digit declines, their combined share slipping as consumers delayed purchases or switched to older devices. Meanwhile, the six largest spenders on AI infrastructure—Amazon, Alphabet, Meta, Nvidia, Oracle and SpaceX—issued $244 billion in debt in the first half of the year, more than double the prior-year period, intensifying competition for global capital.

The supply squeeze is feeding into broader price pressures. US consumer electronics prices have already risen, with Apple increasing laptop and iPad prices by 15 to 25 per cent and Microsoft and Sony raising console prices, all citing memory costs. Electricity prices are also climbing as data centres claim a growing share of new generation capacity. Economists in New York expect AI-related investment to add roughly half a percentage point to core consumer inflation by year-end, a magnitude that could offset disinflation from moderating rents and fading tariff effects. The Federal Reserve is monitoring the June inflation report, due Tuesday, for further signs of AI-driven price persistence, while Counterpoint Research forecasts the memory shortage will extend into 2027, keeping the smartphone market under pressure.