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Global Smartphone Market Faces Record Annual Decline as Chip Crunch Worsens

The iPhone 17 series on display at the Apple Store in New York City, US, September 19, 2025. (Reuters)
The iPhone 17 series on display at the Apple Store in New York City, US, September 19, 2025. (Reuters)
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Global Smartphone Market Faces Record Annual Decline as Chip Crunch Worsens

The iPhone 17 series on display at the Apple Store in New York City, US, September 19, 2025. (Reuters)
The iPhone 17 series on display at the Apple Store in New York City, US, September 19, 2025. (Reuters)

The global smartphone market is heading for its steepest annual contraction on record, with shipments projected to slump by 13.9% this year to 1.08 billion units, Counterpoint Research said on Monday, citing a worsening shortage of memory chips.

The forecast is a downgrade from the 12.4% decline projected in February, with the squeeze in global chip supply exacerbated by the Iran war.

IMPACT MOST ACUTE AT BUDGET END OF MARKET

The impact is being felt most acutely in lower-end smartphones as ‌chipmakers shift ‌production capacity to AI-related chips, making entry-level devices less ‌economical ⁠to produce.

Global smartphone wholesale ⁠prices rose 14% in the first quarter while shipments fell 3.1% year on year. That trend is expected to continue as inventory built before the supply shock becomes depleted, with some models priced below $150 likely to disappear from the market.

"Smartphone makers in the low and mid-tier are caught between cost increases they cannot absorb and consumers with limited spending power," said Wang ⁠Yang, a principal analyst at Counterpoint, an independent research ‌company that publishes quarterly smartphone shipment data.

"The ‌question is no longer how to grow shipments or market share, but whether ‌to remain in the market at all."

The memory chip shortage ‌is the most severe supply-side disruption the smartphone industry has faced, Wang said, adding that manufacturers are unable to offset the impact through pricing or product changes.

PREMIUM END OF THE MARKET MORE RESILIENT

The premium segment has proven more resilient. Apple posted ‌record revenue for the first three months of the year, helped by customers upgrading to its iPhone ⁠17 series. ⁠Apple's 2026 shipments are expected to remain flat before rising 5% next year, Counterpoint projections show.

With more stable chip supply and stronger margins than many rivals, Apple is well placed to gain market share and could face less pressure to raise prices.

Samsung Electronics kept volumes steady in the first quarter and is expected by Counterpoint to register only a 4% decline in shipments over the full year, outperforming the wider market thanks to stable supply and a consistent product line-up.

Transsion, which is heavily exposed to the market for smartphones priced below $150, is forecast to suffer a 32% drop in shipments this year. Rivals Xiaomi and Honor, meanwhile, are projected to post full-year declines of 28% and 20% respectively, Counterpoint said.

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Technology

Nvidia to Work with US, European Humanoid Robot Makers in Addition to China’s Unitree

A man shakes the hand of a Chinese G1 humanoid robot made by Unitree Robotics at a conference in Mumbai, India, May 22, 2026. (Reuters)
A man shakes the hand of a Chinese G1 humanoid robot made by Unitree Robotics at a conference in Mumbai, India, May 22, 2026. (Reuters)
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Nvidia to Work with US, European Humanoid Robot Makers in Addition to China’s Unitree

A man shakes the hand of a Chinese G1 humanoid robot made by Unitree Robotics at a conference in Mumbai, India, May 22, 2026. (Reuters)
A man shakes the hand of a Chinese G1 humanoid robot made by Unitree Robotics at a conference in Mumbai, India, May 22, 2026. (Reuters)

Nvidia ‌plans to work with humanoid robot makers in the US, Europe and South Korea in addition to China's Unitree to build robots for researchers, according to the AI chip company's executives.

After CEO Jensen Huang's keynote address in Taiwan on Monday ahead of the Computex trade show, Nvidia announced that the company is working with China's Unitree, a leading maker of humanoid robots, to provide a standardized version of Unitree's H2 robot that can be used by academic researchers.

The robot's body will come from ‌Unitree, its ‌hands will come from Singapore-headquartered Sharpa, and the ‌computing ⁠brains of the device ⁠will come from Nvidia. Nvidia said that researchers at Stanford University and the University of California San Diego, among others, plan to use the machines.

Unitree, whose dancing robots were the centerpiece of China's Spring Festival gala earlier this year, is pursuing a public listing in China.

But US lawmakers have alleged that ⁠Unitree has extensive ties to the Chinese government ‌and military and have introduced a ‌bill that would ban use of the firm's robots by ‌researchers who receive US government funding.

Nvidia executives told Reuters that ‌the company plans to pursue more efforts like the Unitree one with robotics firms outside China. They did not name the partners in the US, South Korea and Europe and spoke on condition of ‌anonymity as the plans are not public.

The Nvidia executives said the work with Unitree is ⁠aimed at improving ⁠the cybersecurity of the Unitree robots for researchers. For example, any software updates meant for the robot's subsystems will have to flow through Nvidia's chip, where the code can be checked for authenticity.

By directly integrating Nvidia's "Blackwell" chips with Unitree's robot bodies, Nvidia, which plans to use the machines in its own research, will bring the same security features that it uses to protect data center servers, the executives said.

Those security technologies, known as secure boot and confidential computing, are aimed at ensuring the robots cannot run malicious code and that sensitive data cannot be moved off the robots without permission.

Technology

EU Wants to Break Up with US Tech

To help European firms edge out foreign rivals, the EU is set to unveil new rules covering the cloud, AI and chip sectors on June 3. (AFP file)
To help European firms edge out foreign rivals, the EU is set to unveil new rules covering the cloud, AI and chip sectors on June 3. (AFP file)
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EU Wants to Break Up with US Tech

To help European firms edge out foreign rivals, the EU is set to unveil new rules covering the cloud, AI and chip sectors on June 3. (AFP file)
To help European firms edge out foreign rivals, the EU is set to unveil new rules covering the cloud, AI and chip sectors on June 3. (AFP file)

Wary of being vulnerable to the whims of foreign governments, the European Union is preparing far-reaching new moves to ditch American digital companies and Chinese chips in favor of European alternatives.

The EU's technological sovereignty package is among many measures taken by Brussels to slash dependence on foreign firms and boost local manufacturing -- but risks opening up a new front in transatlantic tensions.

The hotly awaited package of new rules on chips, cloud computing and AI will be presented on Wednesday as part of the EU's effort to "reclaim its place in the global race for geoeconomic power", a draft strategy document seen by AFP said.

Of particular concern is how much the European Union relies on US cloud providers, which account for around 70 percent of Europe's market.

Since President Donald Trump returned to the White House last year, Europeans worry that critical digital infrastructure could be brought to a halt by an American "kill switch" if tensions ever reached fever pitch.

Top EU officials don't directly name their target as the United States, but American tech dominates, from cloud computing to social media to e-commerce.

"We need to develop our own capacities. We cannot allow someone trying to influence our own decisions, our own values, our own well-functioning economy and services," EU competition tsar Teresa Ribera said this month.

EU officials often point to Washington's sanctions against International Criminal Court judges -- imposed by Trump in February 2025 -- to illustrate the grip of US firms. Judge Nicolas Guillou has described how he lost access to his Visa card since it is an American system.

But US envoy to the EU Andrew Puzder has warned against any protectionist moves, while American companies have urged Europe not to keep them out.

"Europe will not be able to pull itself into the AI economy by bringing other people down," Puzder told AFP last month when asked about the plans.

- Sweeping package -

Wednesday's package will include:

-- the "Cloud and AI Development Act", aimed at speeding up the deployment of data center infrastructure

-- a "Chips Act" proposal to reinforce the security of supply for semi-conductors by reducing dependence on foreign providers

-- a push for public authorities to use more open-source software solutions as a way to gain greater control and flexibility and avoid being locked in.

EU lawmaker Oliver Schenk told AFP the package was "not about opposing our trading partners or closing markets", but said: "Europe must avoid becoming structurally dependent on any single external actor" for AI, cloud and chips.

The draft strategy, which could still change before the announcement, said governments would be expected to conduct "sovereignty risk assessments" for cloud and AI to "improve resilience" and spot European alternatives.

"Europe must ensure that public investments in AI and cloud infrastructure strengthen European innovation capacity, resilience and security," Schenk said.

According to a second draft document on chips, the commission wants the power to intervene in the event of a crisis by forcing "manufacturers to prioritize orders for crisis-critical products, overriding existing contracts".

It also proposes common purchasing, which means the EU would act as "a central buyer for multiple member states facing severe shortages".

- 'No kill switch' -

Aaron Cooper of tech industry group Business Software Alliance sought to offer reassurances to Europeans who fear any US administration could act to hurt the bloc at times of tension, following past frictions, including over tariffs.

"There is no such thing as a kill switch," Cooper told AFP, adding companies "want to comply with laws wherever they're doing business".

American tech companies have been keen to shift the focus of the debate, insisting Europeans would be in charge of their data while using US services.

"Digital sovereignty is about control, not just borders," said Ana Paula Assis, chair for IBM Europe, Middle East, Africa and Asia Pacific, adding that the company helps its clients "maintain authority over their entire IT estate".

The EU says the package will drive innovation and help Europe catch up with the United States and China in the AI race.

But Ben Brake, director general of DOT Europe, whose members include Amazon and Apple, said "retaliating against US corporations in response to trade disputes will neither drive innovation nor strengthen Europe's competitiveness".

Technology

Huawei Bets on Speed Over Shrinking Transistors to Sidestep US Chip Sanctions

A logo for Huawei is seen during the KubeCon + CloudNativeCon Europe hosted by the Cloud Native Computing Foundation (CNCF) in Paris, France, March 20, 2024. (Reuters)
A logo for Huawei is seen during the KubeCon + CloudNativeCon Europe hosted by the Cloud Native Computing Foundation (CNCF) in Paris, France, March 20, 2024. (Reuters)
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Huawei Bets on Speed Over Shrinking Transistors to Sidestep US Chip Sanctions

A logo for Huawei is seen during the KubeCon + CloudNativeCon Europe hosted by the Cloud Native Computing Foundation (CNCF) in Paris, France, March 20, 2024. (Reuters)
A logo for Huawei is seen during the KubeCon + CloudNativeCon Europe hosted by the Cloud Native Computing Foundation (CNCF) in Paris, France, March 20, 2024. (Reuters)

Huawei's new chip design principle focused on boosting transmission speed rather than continuing to shrink semiconductors offers a path for China to build cutting-edge chips despite US sanctions, though whether it represents a true breakthrough remains to be seen.

China has been barred since 2019 from importing ASML's most advanced extreme ultraviolet (EUV) lithography machines, curbing the ability of its chipmakers to keep up with global leaders like Taiwan's TSMC in relying on ever-smaller manufacturing processes that make chips more powerful.

For decades, the semiconductor industry has been governed by Moore's Law - the observation that the number of transistors on a microchip doubles roughly every two years.

Huawei this week unveiled an alternative approach: cutting the time signals take to move through chips and larger computing systems using a principle it calls the Tau Scaling Law.

Its central technique, LogicFolding, aims to arrange logic, analogue and memory circuits in stacked, more tightly connected structures, potentially improving density, efficiency and clock speeds over the next decade.

Proponents see it as ‌a way to ‌extend chip progress as manufacturing advances begin to slow.

"For Huawei, chips face two key constraints. ‌One ⁠is inevitable that Moore's ⁠Law will hit a physical 'wall' within the next decade," He Tingbo, the president of Huawei's semiconductor business, told China's People's Daily this week.

"The other is accidental because of the external restrictions that Huawei encountered this 'wall' earlier than its peers," she said, in a likely reference to US sanctions on importing advanced EUV machines.

But others argue that reducing latency has always been part of semiconductor design and that many of the underlying ideas resemble existing work in three-dimensional (3D) stacking, advanced packaging and system optimization.

"This is a breakthrough for Huawei, but it's not a threat for TSMC," Nvidia CEO Jensen Huang told reporters in Taipei on Thursday. "TSMC has been using die stacking and 3D packaging for how long now? Almost ⁠10 years. And so TSMC's technology is very advanced."

NOT A NEW CONCEPT?

In the race to ‌build more powerful computing systems, the chip industry has already embraced advanced packaging technologies ‌that stack chips vertically.

TSMC has been at the forefront with its packaging technology called SoIC, which enables more tightly integrated heterogeneous chiplets to reduce ‌size and improve performance.

Memory chip makers such as SK Hynix and Samsung Electronics also use advanced 3D stacking and packaging technologies ‌to produce multi-layer memory chips, a key component of AI chipsets, and to improve power efficiency and performance.

Huawei believes LogicFolding may actually go beyond the techniques commonly used in 3D integrated circuit stacking, thanks to "very finely and carefully split the critical paths of logic circuits across multiple layers," according to Liao Heng, chief scientist at Huawei Semiconductor.

But Bernstein analysts cautioned in a note that while stacking multiple chip layers boosts transistor density, it also increases power ‌density and risks overheating chips. Production yields and costs will be another barrier for adoption, they added.

Huawei's own roadmap also points to those challenges. Huawei's He said the approach would require ⁠new semiconductor design tools suited to ⁠folded chip architectures, as well as better ways to manage heat across devices ranging from smartphones to large AI data centers.

"With the methodology of not optimizing the area on a chip level, but on a system level based on time, that will dramatically change the capability requirements for the EDA (electronic design automation) vendors," said Handel H. Jones, CEO of International Business Strategies, during a panel discussion on Tau Scaling on Tuesday.

Mainstream EDA software produced by vendors like Cadence Design Systems and Synopsys plays a crucial role in creating blueprints for sophisticated semiconductor devices.

EYES ON NEW KIRIN CHIP

Huawei's most concrete claims centered on a new Kirin smartphone chip that will be launched later this year, which would be the first to use its LogicFolding architecture.

Compared with its earlier single-layer design, the new chip would improve power efficiency by 41%, and raise the chip's peak operating speed by nearly 13%, Huawei's He said in a speech on Monday.

Those figures would be significant if achieved at commercial scale. But Huawei did not provide production yield information, cost comparisons or a clear explanation of how the gains would compare with rival chips made using more advanced process nodes.

"There's nothing concrete that can be independently verified or benchmarked against other players at the moment," said Lian Jye Su, chief analyst at tech research firm Omdia.