In 2025, Korea's industrial sectors were split between winners and losers. Automobiles and petrochemicals struggled under the impact of U.S. tariff imposition and the Russia-Ukraine war, while sectors such as shipbuilding and defense enjoyed a boom as global demand increased. We examine the key issues that will drive the global economy in 2026 and forecast their sector-by-sector impacts. [Editor's note]
"We will equip all Galaxy smartphones, premium TVs, and appliances capable of Wi-Fi consolidation with artificial intelligence (AI). We believe higher prices for key components will in part affect shipments and the market."
Roh Tae-Moon, head of the Device eXperience (DX) institutional sector at Samsung Electronics (president), said this at a press briefing on the 5th (local time) ahead of the opening of the world's largest IT exhibition, "CES 2026." In a recent interview with Reuters, Roh said, "No corporations can be free in an unprecedented situation." It was a remark that distilled the concerns of the Samsung Electronics chief, who leads the global smartphone market alongside Apple.
Shin Min-su, a professor in the Department of Business Administration at Hanyang University, said, "The size and shape of handsets are becoming similar among smartphone makers, so competition will intensify more in software than hardware going forward," but added, "However, software advancements are less visible than hardware, so there will be limits to reflecting the rise in memory (DRAM) prices in price hikes." Shin added, "What matters is how effectively makers entice consumers with differentiated on-device (embedded) AI."
◇ Higher DRAM prices add pressure… handset price hikes inevitable
What the market worries about is the price of DRAM, a key component that determines smartphones' computing speed and storage. According to market research firm TrendForce, contract prices for generic DRAM in the first quarter of this year are expected to rise 55% to 60% from the previous quarter. Counterpoint Research said, "The memory market has entered a 'Hyper-Bull' phase surpassing the historic peak of 2018," adding, "After DRAM prices rose 40% to 50% quarter over quarter in the first quarter, they will climb another 20% in the second quarter."
In smartphone manufacturing costs, memory semiconductors account for about 18%. Counterpoint Research analyzed that "due to higher DRAM prices, component costs for smartphones appear to have risen about 25% for low-end models, 15% for midrange, and around 10% for high-end," and "additional expense increases of 10% to 15% are expected through the second quarter of 2026." TrendForce said, "Even Apple, which maintains high revenue with a premium strategy, will see the share of memory in total iPhone manufacturing costs increase significantly in the first quarter of this year," adding, "It could force a reevaluation of pricing strategies for new models and lead to reducing or eliminating price cuts applied to older models."
Smartphone makers are toying with the card of raising handset prices. The Galaxy S26 series, set to be unveiled next month, is likely to break its three-year price freeze. Counterpoint Research projected that this year's smartphone average selling price (ASP) growth rate will reach 6.9%.
◇ Focus on defending profitability… who will win the foldable showdown
For smartphone makers, defending profitability has emerged as a key theme this year. IDC assessed that manufacturers could choose both to raise handset prices and to lower specifications. Senior researcher Senhao Bai at Counterpoint Research said, "Some models are cutting costs by lowering specifications for camera modules, displays, audio components, and memory, while strategies such as reusing existing parts and simplifying lineups are expanding," adding, "There are also parallel attempts to steer consumers toward premium models to defend profitability."
In particular, the more low-end smartphones a company sells, the worse the situation becomes. Counterpoint Research analyst Wang Yang said, "A steep and sustained price hike is not viable for low-end smartphones," adding, "Companies that struggle to pass on expenses will have no choice but to pare back parts of their budget portfolio, and in fact shipments of low-end product lines are falling sharply." IDC also expected that Chinese makers focused on budget models—such as Xiaomi, Realme, TCL, and Transsion—will take the biggest hit. For Samsung Electronics, the A series' high global sales are a burden factor.
This year, handset makers' AI strategies are set to continue. The foldable market for clamshell phones is also expected to see changes. There is speculation that Apple will unveil the iPhone 18 series and its first foldable model in the second half of this year. IDC said that if Apple enters the foldable market, foldable phone shipments will surge more than 30% from 2025.
◇ Chinese challengers take on the Samsung-Apple duopoly
Amid the tough environment of rising component prices, fierce competition among Korean, U.S., and Chinese manufacturers is expected to continue.
According to Counterpoint Research, last year Apple surpassed Samsung Electronics for the first time since 2011 with a shipment-based market share of 19.4%, compared with Samsung Electronics' 18.7%. Chinese companies such as Huawei, Vivo, and Oppo are also mounting an aggressive push. Chinese makers are particularly strong in emerging markets. According to Counterpoint Research, in the third quarter of last year Samsung Electronics fell to third place (13%) in India, trailing China's Vivo (24%) and Oppo (16%). As recently as the first quarter of 2024, it was tied for second with Oppo, but from the second quarter of the same year it slipped to third. Huawei took the top spot in the foldable market in the first half of last year, buoyed by the popularity of new models such as the Pura X, Pocket 2, and Nova Flip.
Counterpoint Research projected that this year, Samsung and Apple will each record a 19% share of smartphone shipments, tying for first place. They are expected to be followed by Xiaomi (14%), Vivo (9%), Oppo (8%), and Oner (6%).
Hong In-gi, a professor in the Department of Electronic Engineering at Kyunghee University, said, "If smartphone makers scale back specifications, they will be shunned by the market and miss growth opportunities," adding, "Judging by the sellout streak of Samsung's twice-folding smartphone Z Tri-Fold, the winner in the smartphone market will be determined by how well new technologies are implemented."