Flash Memory Shortage Hits Smartphone Supply

SAN FRANCISCO — Global smartphone sales posted an annual increase in the second quarter, but a limited supply of components such as flash memory are expected to impact the smartphone supply in the second half of the year, according to market research Gartner Inc.

Anshul Gupta, research director at Gartner, said rising costs and reduced availability for NAND flash and OLED displays will affect premium smartphone sales in the remainder of the year.

"We've already seen Huawei's P10 suffer from a flash memory shortage, and smaller, traditional brands, such as HTC, LG and Sony, are stuck between aggressive Chinese brands and the dominating market shares of Samsung and Apple in the premium smartphone segment," Gupta said.

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Smartphone sales totaled 366.2 million units in the second quarter, up 6.7 percent compared to the first quarter of 2016,Gartner (Stamford, Conn.) said. Year-over-year growth was attributed largely to  growing demand for 4G smartphones in emerging markets.

"Although demand for utility smartphones remains strong, there is growing demand in emerging markets for 4G smartphones, with more storage, better processors and more advanced cameras. This is translating into higher demand for mid-priced [$150 to $200] smartphones," Gupta said.

Sales to the Greater China region and emerging Asia-Pacific markets accounted  for nearly half of smartphone sales in the second quarter, with total share so 28 percent and 21 percent, respectively, said Gartner.

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Android extended its lead in mobile phone operating systems in the second quarter to 88 percent market share, compared with 12 percent for Apple iOS, Gartner said.