AI Demand Impacts Chip Supply, Smartphone Shipments Face Record Decline

Market research firm Counterpoint today lowered its global smartphone shipment forecast for this year, adjusting it from the 12.4% year-on-year decline projected in February to a 13.9% contraction, totaling 1.08 billion units. This marks the largest decline on record, driven by worsening shortages in memory chips. Reuters reports that Counterpoint, which publishes quarterly global smartphone shipment statistics, noted that the war in Iran, which broke out on February 28, has further tightened global chip supplies. According to Counterpoint, the impact is most evident in the lower-end smartphone market, as chip manufacturers shift capacity toward artificial intelligence (AI) products, making the production of entry-level phones less cost-effective. Counterpoint's survey shows that global wholesale smartphone prices rose 14% in the first quarter of this year compared to the same period last year, while shipment volumes fell 3.1%. Counterpoint expects this trend to continue as inventories stockpiled before the chip supply shock are gradually depleted; this will likely lead to the disappearance of some phones priced below $150 (approximately NT$4,700) from the market. Counterpoint lead analyst Yang Wang pointed out that mid-to-low-end smartphone manufacturers are trapped in a dilemma of being unable to absorb rising costs while facing limited consumer purchasing power. "The question is no longer how to expand shipments or market share, but whether they can even remain in the market."