China's smartphone market shrank 2% year-over-year in the second quarter of 2026, according to preliminary data from Counterpoint Research.
However, Huawei and Apple both managed to grow significantly, bucking the overall trend.
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The decline is largely attributed to a sharp increase in memory and storage costs, which forced manufacturers to prioritize profit margins over volume growth.
Huawei Leads with 23% Market Share
Huawei captured a 23% share in Q2, its highest since late 2020.
The company's shipments rose 24% year-over-year, fueled by steady demand for the Enjoy 90 Pro Max and the launch of the Pura X Max.
The wide-foldable form factor of the Pura X Max has proven successful in the premium foldable segment.
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Apple matched Huawei's growth with a 23% year-over-year increase in shipments.
As rising component costs push Android OEMs to raise prices, Apple's relatively stable pricing for the iPhone 17 series has made it more competitive.
Consumer expectations of an impending iPhone price hike in Q3 also prompted early upgrades.
Android Makers Struggle
Chinese Android brands like Oppo, Vivo, and Xiaomi are scaling back low-end production to focus on profitability.
They are relying on reliable mass-market releases such as the Reno 16, Y600 Pro, and Redmi K90 series to cushion the decline.
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The hardware market is expected to become more expensive. Manufacturers used cheaper memory inventory purchased late last year during the first half of 2026.
As higher-cost components reach assembly lines in the second half, consumers should prepare for further price increases.
The component squeeze is also impacting other markets.
In India, Q2 shipments saw their steepest drop in six years, falling 10% as average prices jumped 15%.
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The budget sector was hit hard, though premium devices remained resilient. Counterpoint expects the Indian market to shrink 13% this year as affordability becomes a global challenge.
