Geopolitical tensions and commodity repricing hit smartphone supply chains

Global shipments of smartphone AMOLED panels are forecast to decline to 810 million units in 2026, marking a significant year-on-year contraction after three consecutive years of growth, according to the latest data from Omdia.

This projected dip from the 817 million units shipped in 2025 is primarily attributed to a critical shortage of memory supply and rapidly rising prices within that sector.

Smartphone manufacturers have begun to scale back their procurement and shipment plans for 2026 as they grapple with these mounting component costs.

Brands remain reluctant to pass these higher expenses on to the general public due to fears that retail price hikes would slow replacement cycles and suppress consumer demand.

Consequently, AMOLED panels have emerged as a primary target for cost-cutting efforts as manufacturers seek to offset the financial impact of the memory market.

However, industry experts suggest that the scope for further reductions in display pricing is extremely limited following aggressive pricing reductions already implemented throughout 2025.

In many device configurations, the cost of memory is now approaching or even exceeding the cost of the display, leaving very little financial headroom for further savings.

The immediate cause of the tightening supply is the surging demand from AI servers, which is currently absorbing vast amounts of global production capacity.

Broader geopolitical tensions and a shift towards lower interest rates in the United States have also encouraged speculative capital to flow into commodity markets such as semiconductors.

This shift has triggered a structural repricing of basic materials, which has effectively pushed imported inflation onto manufacturers operating further down the supply chain.

“Many smartphone makers still rely on a product-line, cost-down mindset, assuming pressure can be pushed upstream to oversupplied components such as AMOLED panels to contain Bill of Materials inflation,” Joy Guo, Principal Analyst at Omdia, said.

Guo noted that this specific assumption is likely to face greater resistance during the current economic cycle.

Many manufacturers have yet to fully recognise the supply chain impact of bulk commodity repricing on the electronics industry, Guo added.

If upstream costs have already shifted structurally while downstream plans continue to push forward out of inertia, risks can build across the supply chain, the analyst noted.

In that context, we remain cautious on the smartphone AMOLED shipment outlook for 2026, Guo concluded.

The report highlights a growing disconnect between the cost-down expectations of phone brands and the new realities of global material scarcity.

As the industry moves into 2026, the ability of manufacturers to maintain profit margins without raising consumer prices will be severely tested by these structural shifts.