Chinese smartphone makers are preparing for their most challenging year since the Covid-19 pandemic, as analysts say skyrocketing memory chip prices are forcing brands to make a difficult choice: absorb the higher costs, raise retail prices or downgrade storage configurations.

In a report published on Monday, market research firm Counterpoint projected that global smartphone shipments would plunge nearly 14 per cent this year to about 1.08 billion units – the industry’s lowest volume since 2013.

The sharp contraction was being driven by the dual blow of soaring memory costs and sluggish consumer demand for replacement handsets.

However, market pressure is likely to hit vendors unevenly, Counterpoint said. Apple and Samsung Electronics are expected to weather the downturn best, shielded by stronger pricing power and premium-heavy product portfolios.

Meanwhile, Chinese Android-based brands, led by Xiaomi, face a harsher profit crunch because of their thinner hardware margins and heavier reliance on price-sensitive segments.

Other Chinese Android vendors, including Oppo, Vivo and Transsion, are also expected to face pressure as higher component costs weigh on their price-sensitive product lines and overseas emerging-market sales.