The U.S. smartphone market faced significant headwinds in the second quarter of 2026. According to the latest report from research firm Counterpoint Research, U.S. smartphone sales fell 5% year-over-year compared to the same period in 2025, squeezed by both rising memory prices and macroeconomic pressures. The low-end segment bore the brunt of the damage, with sales of devices priced below $100 (approximately NT$3,200) plummeting 64%.

The report noted that consumers faced a double squeeze this quarter. On one hand, rising prices for everyday goods such as gasoline eroded household disposable income, weakening purchasing power for smartphones and other electronics. On the other hand, major cloud service providers aggressively procured memory to build out AI infrastructure, driving DRAM and storage chip prices sharply higher and sending component costs for phone manufacturers soaring. These two forces dealt a fatal blow to the already thin-margin low-end market.

From a brand perspective, the market exhibited a clear “winner-take-all” divergence. The top four brands—Apple, Samsung Electronics (005930.KS), Motorola, and Google—posted a combined sales decline of just 4% year-over-year in the U.S. market, a relatively resilient performance. However, all other manufacturers outside these four saw combined sales crater 45%, nearly halving.

Counterpoint Research’s analysis indicates that large manufacturers, leveraging their procurement scale advantages, can secure component inventory at relatively favorable prices, retaining operating room in a rising-cost environment. In contrast, small and mid-sized manufacturers struggle to source memory and storage chips at reasonable costs. Compounding the problem, last year’s tariff concerns and prepaid market weakness had already prompted some brands to scale back or exit U.S. operations, and now intensifying cost pressures have made their situation even more difficult. Finnish brand HMD formally exited the U.S. market last year.

Low-End Market Collapse Reshuffles Prepaid Landscape

The budget phone market was the biggest casualty of this wave of cost increases. In the second quarter, sales of ultra-low-end devices priced below $100 fell 64% year-over-year, with nearly two-thirds of the market evaporating. Counterpoint Research noted that manufacturers facing rising memory costs had no choice but to halt supply or raise prices to maintain basic margins, causing ultra-low-priced products to rapidly shrink from the market.

The impact was particularly pronounced for white-label smartphones sold under carriers’ own brands. As component costs rose, the price gap between white-label products and entry-level devices from major brands like Samsung and Motorola narrowed significantly. Consumers shifted toward products from larger, more recognizable brands, causing white-label phone sales to plummet.

The U.S. prepaid phone market saw overall sales decline 11% year-over-year in the second quarter, but amid the market reshuffling, Samsung and Motorola actually expanded their market share. Telecom carriers are actively using the Samsung Galaxy A series and Motorola Moto G series as primary products to attract upgrade and number-porting customers. As competitors exit or weaken, these two brands have further consolidated their positions in the prepaid market.

The price-band structure also shifted notably. After Motorola raised prices on some Moto G series models in the second quarter, the sales share of the $200–$299 price band (approximately NT$6,400–$9,600) expanded roughly threefold compared to the same period a year earlier. Samsung also recently raised the price of the Galaxy A17 by $50 (approximately NT$1,600).

Q3 ASP Continues to Climb; Apple’s iPhone 18 Is Key

Looking ahead to the third quarter, smartphone average selling prices (ASP) are expected to keep rising. Counterpoint Research expects Apple to raise iPhone 18 series pricing, and Google is launching the Pixel 11 series at a higher price point than last year’s Pixel 10 lineup.

Apple has always held a pivotal position in the U.S. market. Counterpoint Research noted that Apple typically accounts for more than half of U.S. smartphone sales in the third quarter, making iPhone flagship pricing changes enormously influential on overall market ASP. The firm expects iPhone 15 series users to form a strong upgrade cycle, but actual sales performance will depend on how much subsidy carriers are willing to offer. If carriers can still offer the iPhone 18 at free or near-free pricing after the price increase, sales momentum could be sustained.

Analyst expectations for iPhone 18 pricing have begun to emerge. Analyst Jeff Pu estimates the iPhone 18 Pro will be priced between $1,349 and $1,399, while the iPhone 18 Pro Max will range from $1,449 to $1,499. Multiple reports also indicate the iPhone Ultra could start at around $2,500.

Apple’s fiscal third-quarter 2026 results, announced in late July, showed iPhone revenue up 22% year-over-year to $54.2 billion (approximately NT$1.7 trillion). Apple also warned the market that memory costs and supply constraints will worsen significantly in the September quarter, with the iPhone, iPad, and Mac product lines most affected.

Counterpoint Research concluded that with overall market prices continuing to rise and profit pressures intensifying for other low-end manufacturers, the U.S. prepaid market will consolidate further around Samsung and Motorola—a market restructuring trend unlikely to reverse in the near term.