Global smartphone demand weakens, but premium models and high-quality supply chains outperform against the trend

Overview

This report tracks global smartphone sell-through in March 2026 and 1Q26. Citing Counterpoint data, UBS notes that global smartphone demand continues to weaken, with March sales down 3.5% YoY and 1Q26 sales down 4.8% YoY. The demand downturn is mainly affected by memory shortages and price increase pressure, but high-end smartphones have performed better against the trend, with Apple and Samsung showing more resilience than most Android vendors.

Core views

The core view is that “overall volume is under pressure, while the mix is diverging.” On one hand, all major global regions posted negative year-over-year growth in 1Q26, with Europe, India, the US, China, and other regions down 7.3%, 7.1%, 5.7%, 4.3%, and 3.4%, respectively. On the other hand, iPhone 1Q26 sales grew 11.6% YoY, clearly outperforming major Android peers; initial sales of the Galaxy S26 series were stronger than expected, and the Ultra model mix increased, indicating consumers continue to tilt toward premium models. UBS therefore prefers supply chain companies benefiting from premium smartphones, memory, MLCC, and advanced semiconductor demand.

Analysis framework

The report is based on Counterpoint sell-through data and breaks it down by month, region, OEM, price band, and product series. Combined with UBS’s views on the supply chain, product launch cadence, component costs, and company ratings, it forms a relative preference ranking for the smartphone supply chain.

Methodology notes

• End-demand trackingSell-through YoY and QoQ analysis

  Use sell-through rather than pure shipments to measure real demand

  The report focuses on smartphone sell-through in March and 1Q26, broken down by region and OEM, to identify demand declines and brand divergence.

• Relative supply chain preferenceMost/Least Preferred list

  Compare the relative attractiveness of different supply chain companies within the same theme

  UBS divides smartphone supply chain companies into more preferred and less preferred lists, combining ratings, valuation, component cycles, and end-brand exposure to judge investment priority.

• Product mix analysisPremium model mix observation

  Use the mix of flagship and Pro/Ultra models to measure the premiumization trend

  The Galaxy S26 Ultra accounted for 60% of series sales, above the 56% of the S25 series, showing relatively stronger demand for premium models.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Apple / iPhone supply chain

  One of the core beneficiary directions of resilient premium smartphone demand

  Strengths

  iPhone sell-through in 1Q26 grew 11.6% YoY, with growth sustained for multiple months, significantly outperforming most Android peers.

  Weaknesses

  Apple itself is rated Neutral, and the US region did not show the same improvement.

  Comparison

  Performance was significantly better than Vivo, Oppo, Xiaomi, and Transsion.

  Risks

  If premium smartphone demand slows, regional growth weakens, or component costs rise further, supply chain earnings leverage could come under pressure.

• Samsung / Galaxy S26 series

  A relatively more resilient flagship representative within the Android camp

  Strengths

  Initial Galaxy S26 sales grew 7.9% versus the same period of the prior generation, and the Ultra model mix rose to 60%.

  Weaknesses

  Samsung’s overall smartphone sell-through in 1Q26 still declined 5.5% YoY.

  Comparison

  UBS expects Samsung to be more resilient than Chinese Android peers.

  Risks

  The sustainability of flagship sales, performance of new foldables, and rising component costs still need to be validated.

• Memory supply chain such as SK Hynix and Micron

  Benefiting from memory tightness and premium smartphone configuration upgrades

  Strengths

  UBS includes SK Hynix and Micron on its preference list, both rated Buy.

  Weaknesses

  Strongly cyclical, with price and inventory volatility potentially amplifying earnings swings.

  Comparison

  More favored than smartphone supply chain assets with higher exposure to low-end demand.

  Risks

  Memory price declines, weaker-than-expected demand, or customer inventory adjustments.

• Semiconductor and MLCC supply chain such as MediaTek, Broadcom, TSMC, Murata, and SEMCO

  Beneficiaries of smartphone premiumization and demand for critical components

  Strengths

  Many of these companies are included on UBS’s preference list and rated Buy.

  Weaknesses

  They are still affected by overall smartphone volume declines and customer order adjustments.

  Comparison

  Relatively more attractive than more cautious names such as Hua Hong, Lenovo, LG Display, Pegatron, Xiaomi, and Sunny Optical.

  Risks

  Continued decline in end demand, intensified competition, valuation pullbacks, and reversal of the inventory cycle.

• Chinese Android OEMs and related more cautious names

  A pressured direction amid declining smartphone demand and brand divergence

  Strengths

  Some companies still have scale, channel, or product-line foundations.

  Weaknesses

  Vivo, Oppo, Xiaomi, and Transsion all saw 1Q26 sell-through decline YoY, with larger drops for Xiaomi and Transsion.

  Comparison

  Clearly weaker than iPhone performance and also weaker than UBS’s view of Samsung’s resilience.

  Risks

  Market share loss, poor product launch timing, design or channel execution mistakes, price competition, and rising costs.

Key data

• March global smartphone sell-through95.4 million units, -3.5% YoY, +0.6% MoMSource: Counterpoint, cited by UBS; this marks the fourth consecutive month of year-over-year decline.
• 1Q26 global smartphone sell-through268.6 million units, -4.8% YoYAll major regions posted negative year-over-year growth.
• March China smartphone sell-through-1.3% YoYFebruary had grown 16.2% YoY due to the later Lunar New Year, but March turned negative.
• 1Q26 regional YoY performanceEurope -7.3%, India -7.1%, US -5.7%, China -4.3%, RoW -3.4%Europe and India saw the largest declines.
• March iPhone sell-through20.4 million units, +9.7% YoYThe thirteenth consecutive month of year-over-year growth, with improvement across all regions except the US.
• 1Q26 iPhone sell-through63.3 million units, +11.6% YoYSignificantly better than Vivo, Oppo, Xiaomi, and Transsion.
• Major Android peer 1Q26 YoYVivo -5.9%, Oppo -10.3%, Xiaomi -15.4%, Transsion -18.7%Reflects widening divergence between Apple and Android OEMs.
• 1Q26 Samsung smartphone sell-through53.1 million units, -5.5% YoYMainly affected by the Galaxy S26 launch occurring later than the prior generation, impacting the comparison base.
• Initial Galaxy S26 series sales4.9 million units, +7.9% versus the same period of Galaxy S25Despite ASP increases to offset rising component costs, sales were still stronger than expected.
• Galaxy S26 Ultra sales mix60%Higher than the 56% of the Galaxy S25 series, reflecting stronger preference for premium models.
• UBS Samsung 2026 sell-in forecast-3.3% YoYGalaxy S26 series and new foldable products in 2H26 are expected to help Samsung remain more resilient than Chinese peers.

Impact & implications

In terms of investment implications, declining overall smartphone demand is unfavorable for broad OEMs and some component companies, but the resilience of premium models, memory-shortage-driven price increases, and flagship bill-of-materials upgrades make memory, MLCC, advanced semiconductors, and parts of the contract manufacturing supply chain relatively more attractive. Investors should avoid simply extrapolating weak industry volumes to all supply chain assets and instead focus on differences in brand exposure, product mix, and component price cycles.

Risks

• The smartphone industry is highly cyclical, and macroeconomic fluctuations can affect both upside and downside risks.
• Poor product launch timing, design, or channel execution may lead to rapid market share loss.
• The smartphone supply chain is also affected by macro and inventory cycles, resulting in significant earnings volatility.
• Rising component costs, memory shortages, and price increases may suppress end demand or squeeze margins.
• Intense industry competition and insufficient product innovation and R&D investment may weaken a company’s competitiveness.
• Valuation methods mainly include multiple-based analysis; if earnings expectations or comparable-company valuations change, target prices and ratings may be adjusted.

What to watch

• Whether global smartphone sell-through in April and subsequent months continues to decline YoY.
• Whether the China market returns to stable demand after the Lunar New Year distortion.
• Whether the iPhone’s streak of growth is sustainable, especially in the US market.
• Follow-up sales of the Galaxy S26 series, Ultra mix, and the performance of new foldables in 2H26.
• The impact of memory shortages, price increases, and component costs on OEM shipment plans and margins.
• Whether Android OEM build plans continue to be revised down.
• Changes in valuation and earnings expectations for companies on UBS’s preference list versus those on its more cautious list.