The global smartphone market is expected to experience a downturn in 2026, with shipments projected to decline by 13% year-over-year. A recovery is anticipated in 2027, with a modest 3% increase, translating to an estimated 1.1 billion units shipped in 2026 and 1.14 billion in 2027. These figures are notably lower than previous forecasts, which estimated shipments of 1.3 billion for 2026 and 1.31 billion for the following year, according to a recent Morgan Stanley AlphaWise survey.
The survey, conducted with 2,000 participants aged 18 and older from the US and China, in addition to around 1,500 respondents from the UK and Germany, reveals encouraging trends specifically for Apple. While upgrade rates are expected to improve in both the US and China over the coming year, Apple emerges as the sole major smartphone brand anticipated to see a positive year-over-year net switching rate.
Morgan Stanley analyst Erik Woodring highlighted in an investor note that among prospective smartphone upgraders in the US, two primary factors driving interest in Apple devices are advanced features and upgrade eligibility. In China, device quality is the standout reason for users switching to the iPhone, according to the survey results.
Additionally, there is considerable excitement surrounding Apple’s forthcoming foldable iPhone, with 27% of current iPhone users expressing strong interest in the device, which is rumored to be launching later this fall. This move marks Apple’s entry into the foldable smartphone arena, a market already populated by competitors like Samsung and Google, as well as various Chinese brands.
While foldable devices have not yet achieved widespread adoption, their popularity appears to be rising, exemplified by strong preorder numbers for Samsung’s latest Galaxy Z Fold 7, which outpace previous foldable models.
Apple’s approach has often involved waiting for technology to mature before entering a product category, allowing the company to establish a firm market presence. This strategy was previously employed with the iPhone, iPad, and Apple Watch, and appears to be mirrored again with the upcoming foldable.
However, the company faces challenges shaped by a significant memory chip crisis, which is expected to compel several manufacturers to eliminate lower-cost devices due to margin pressures. Nevertheless, Apple possesses the pricing power to manage increased memory costs without necessitating a rise in device prices, a hurdle that many Android competitors may find difficult to navigate.
