Asia’s smartphone vendors face a painful trade-off as surging memory and storage costs force them to choose between protecting margins and defending market share.

Global shipments fell 20 percent year on year in Q3 to their lowest third-quarter level since 2013, according to Omdia.

“For vendors competing primarily on affordability, protecting profitability without sacrificing shipment scale has become an increasingly difficult balancing act,” said Lucas Zhong, Senior Analyst of Omdia. “This pressure is particularly acute in emerging markets, where consumers are more price-sensitive and vendors rely heavily on entry-level devices with already thin profit margins.”

The warning lands squarely on Chinese and other Asia-headquartered vendors that built regional scale through affordable devices.

Xiaomi held third place globally with 12 percent share, followed by Oppo (including realme and OnePlus) at nine percent and Vivo at eight percent. All three lost share compared with a year earlier, while Samsung and Apple grew their combined global share to 45 percent.

Samsung retained pole position with 23 percent global share, despite a year-on-year decline in shipments. Apple came in second with 22 percent, supported by demand for the iPhone 17 family and the September launch of the iPhone 18 Pro and Pro Max.

Their resilience underscores a widening split in the market. Vendors with stronger premium portfolios, global channels and financing capabilities are better placed to absorb component-cost inflation, while mass-market players must make harder choices about which products and markets to serve.

“Rising component costs and differing vendor responses are reshaping the competitive landscape, but market share alone does not tell the full story,” said Hayden Hou, Principal Analyst of Omdia. “As vendors make different trade-offs between shipment scale, revenue and profitability, their performance needs to be assessed beyond unit shipments.”

Scale at a cost

For Asian vendors, cutting low-margin shipments may protect near-term profitability, but Omdia cautions that retreat carries strategic costs.

“However, scaling back shipments to protect margins carries long-term risks, particularly for emerging vendors, as losing market presence can weaken brand visibility and channel mindshare, which may take years to rebuild,” Zhong said.

He said vendors need to make more deliberate choices about where to compete, concentrating resources on markets and products that can sustain both profitability and market relevance.

Vendors are now prioritising average selling price growth and portfolio optimisation to sustain shipment value. This could mean fewer entry-level models, more selective market coverage and a stronger push into mid-range and premium devices.

Omdia does not expect festive demand, promotions or new flagship launches to fully offset supply-side pressures in Q4. Instead, it expects vendors to lean on disciplined inventory management, device financing, trade-in programmes and telco partnerships to sustain upgrades without broad discounting.

“Vendors that can make these products more accessible and demonstrate meaningful improvements in the user experience will be better positioned for the next replacement cycle,” Zhong said.