Samsung, Apple lead as chip shortage squeezes Chinese smartphone makers

Samsung and Apple are the only top vendors to see shipment growth amid a global memory chip shortage. The LPDDR supply crunch, driven by AI demand, is squeezing Chinese rivals like Xiaomi, Oppo, and Vivo, reshaping the smartphone market.

Samsung Electronics and Apple are currently navigating a tightening global memory chip supply that is simultaneously squeezing Chinese smartphone vendors and reshuffling market leadership. While the broader mobile industry faces a shipment decline, these two manufacturers are leveraging financial strength and internal supply chains to maintain growth amidst a critical shortage of low-power DRAM (LPDDR).

According to a report by The Korea Herald, global smartphone shipments fell 4.1 per cent on-year to 289.7 million units in the first quarter. This marks the first January-March decline since 2023. During this period, Samsung secured the top spot with 62.8 million shipments and a 21.7 per cent market share, followed by Apple with 61.1 million units and a 19.6 per cent share. The report highlighted that they were the only two brands among the top vendors to post year-on-year shipment growth.

Market Leaders' Advantage

It attributed this divergence to a tightening supply of LPDDR, which is essential for mobile devices. Demand for these chips is currently being driven by Nvidia, as the US chip giant requires large volumes of LPDDR-based memory for its next-generation AI and graphics processing unit platforms, such as the upcoming Vera Rubin GPU.

"Apple has both financial firepower and bargaining power, allowing it to secure DRAM supply even at a premium," the report quoted an industry source. "Samsung is also minimizing procurement disruptions through close coordination between its mobile experience division and device solutions division."

Chinese Vendors Face a Squeeze

The situation is markedly different for Chinese smartphone makers, who lost significant ground in the first quarter. Xiaomi's shipments dropped by 8 million units compared to the previous year, while Oppo and Vivo also saw their market shares tighten. The report mentioned that these companies lack the internal manufacturing cushion of Samsung or the massive prepayment arrangements Apple utilizes to lock in components.

"Chinese manufacturers have a high exposure to budget and midrange models, which makes it difficult for them to reflect higher component costs in retail prices," the report quoted another industry source. "If they raise prices, sales volume could fall. If they keep prices unchanged, profitability suffers. They are caught in a dilemma."

Future Outlook and Market Reshaping

Market watchers expect memory prices to remain high, with stabilization not anticipated until the second half of 2027. "IDC (International Data Corp.) expects the supply shortage to drag global smartphone shipments down by roughly 12.9 percent this year to 1.12 billion units, reaching the lowest level since 2013," the report said.

For budget-heavy vendors like Xiaomi, which operated at a 10.9 per cent gross profit margin last year, absorbing these rising costs is becoming increasingly difficult.

"This memory shortage could become a turning point that reshapes the competitive order of the smartphone market," the report quoted an analyst at a local brokerage. "In the past, design, cameras and price competitiveness were the key factors. Going forward, the ability to secure core components reliably could determine shipments and market share."

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)