China's smartphone market is expected to see shipments of around 278 million units in 2026, a year-on-year decrease of 2.2 percent, according to a forecast by market research company International Data Corp.

Guo Tianxiang, research manager at IDC China, said 2026 will be a critical year for the industry to respond to challenges and reshape its value proposition.

"Success will no longer rely solely on supply chain control or competing on specifications, but on whether brands can accurately position themselves amid cost pressures, build competitive barriers in the 'AI and ecosystem' race, and ultimately establish deep emotional resonance with users in an era of 'emotional consumption'," Guo said.

Globally, uncertainties remain. Persistent inflation continues to disrupt consumer markets, while memory prices have entered a strong upward cycle, leading to higher device costs and ultimately driving up retail prices, further impacting demand, according to industry analysts.

Another market research company TrendForce has revised its 2026 global smartphone production forecast from a previously estimated 0.1 percent year-on-year growth to a 2 percent decline.

Amid these headwinds, manufacturers are accelerating innovation to capture demand. iQOO, a Chinese smartphone brand, has launched the Z11 Turbo, a mid-range device packed with high-end features, challenging the industry norm that mid-tier phones must compromise on performance, imaging, design or battery life.

The Z11 Turbo is equipped with the Snapdragon 8 Gen 5 flagship chipset and iQOO's self-developed Q2 gaming chip. It features a 200-megapixel main camera, a 7600mAh slim battery, a metal frame, glass or fiberglass back panel, IP68/69 water and dust resistance, and an ultrasonic 3D fingerprint sensor.

As cost pressures and AI-driven transformation reshape the landscape, Chinese smartphone brands are steering investments toward differentiated user experiences and ecosystem integration to sustain growth in an increasingly competitive and sentiment-driven market, experts say.