For decades, the consumer electronics industry relied on a simple formula: Build innovative hardware. Release a new model every year. Sell millions of units worldwide.

That formula has already been breaking down since a couple of years now.

The pandemic exposed how fragile global supply chains could be. But the deeper transformation is happening now and it is structural, not cyclical.

Rising component costs, lengthening device lifecycles, tightening sustainability regulation, and changing consumer expectations are reshaping every part of the industry.

Even the biggest players are acknowledging the shift.

"We will apply AI to all products, all functions, and all services as quickly as possible." — TM Roh, Co-CEO, Samsung Electronics

Apple CEO Tim Cook has also pointed to the value of consumer electronics shifting away from the device itself and toward the ecosystem surrounding it.

And Samsung Europe CEO Simon Sung has described the future of electronics as:

"Less like a collection of gadgets, and more like a coherent, responsive environment that adapts to real life." — Simon Sung, CEO, Samsung Europe

Taken together, these statements point to the same conclusion: consumer electronics are moving from product sales toward lifecycle ecosystems. And that shift brings a new set of challenges.

This article maps the key challenges facing the consumer electronics industry in 2026 and examines how the industry's most forward-thinking companies are navigating them.

The state of the consumer electronics industry in 2026

The global consumer electronics market reached approximately $1.3 trillion in 2025, growing 3% year-on-year. Smartphone shipments are expected to grow but PC growth is slowing after a brief AI-driven refresh cycle. Wearables and smart home devices remain growth categories, but both are facing margin pressure as competition intensifies.

Growth is slowing across established categories.

But the more significant shift is structural: the relationship between consumers and their devices is changing:

• Ownership is becoming less important than access.
• Software and services are increasingly where value is created and captured.
• And regulation is beginning to enforce the product longevity and repairability that consumers and the planet have long needed.
  

These are not temporary headwinds. They are the new operating environment.

Challenge 1: E-waste and mounting regulatory pressure

The world generated 62 million metric tonnes of e-waste in 2022, the equivalent of 1.7 billion laptops, growing at approximately 2.6 million tonnes per year. By 2030, annual e-waste is projected to reach 82 million tonnes. Only 22.3% of e-waste is currently collected and properly recycled. The rest ends up in landfill, informal waste streams, or sitting dormant in households.

For the consumer electronics industry, this is no longer primarily a reputational issue. It is an active compliance issue.

What is now in force across the EU

• The EU Right to Repair Directive entered into force in July 2024. Manufacturers must offer repair services beyond the warranty period, make spare parts available for up to 10 years, and cannot use hardware or software techniques to prevent independent repair.
• The EU Ecodesign for Sustainable Products Regulation (ESPR), adopted in 2024, requires electronics to be designed for durability, repairability, and recyclability — and to carry a Digital Product Passport.
• From June 2025, smartphones and tablets sold in the EU must carry a standardised EU energy label displaying a repairability score (A to E scale), battery life, durability, and software support duration.
• France's Anti-Waste and Circular Economy Law bans the destruction of unsold electronics and requires a repairability index at the point of sale.
• Over 70 countries now enforce some form of e-waste legislation, with Extended Producer Responsibility (EPR) programmes expanding across the US, Canada, and Europe.
  

The practical impact: Manufacturers who designed for planned obsolescence, non-replaceable batteries, proprietary parts, software that slows older devices, face direct legal exposure.

Apple has already expanded its Self Service Repair programme to 32 European countries and redesigned its battery attachment system in direct response to EU requirements.

How leading companies are navigating this

The most structurally effective response to e-waste regulation is a business model that keeps products in use rather than moving them through a linear buy-use-discard cycle.

A Device-as-a-Service or Product-as-a-Service model does exactly this: the manufacturer retains ownership of the device, has a direct incentive to maintain and refurbish it, and redeploys it across multiple subscription cycles.

This is not just a compliance advantage. It is a commercial one. A device that goes through three subscription cycles generates three times the revenue from a single unit of inventory, while refurbishment costs for the second and third cycles are a fraction of original manufacturing cost.

The shift is already visible across the industry — at the retailer level, the manufacturer level, and among specialist subscription operators.

On the retailer and platform side:

The clearest example is Grover, the Berlin-based consumer electronics subscription platform and Europe’s market leader in tech rentals. Founded in 2015, Grover has circulated more than 1.2 million devices, and operates across Germany, Austria, Spain, the Netherlands, and the US.

Devices on Grover are rented out an average of four to five times each.

Grover’s partnership with MediaMarkt and Saturn, Europe’s largest electronics retail group, means customers can now subscribe to devices at the point of sale in over 500 German stores. That is the circular economy operating at mainstream retail scale.

Specialist operators are building similar models at smaller scale. Yuno (Swiss consumer electronics subscription, backed by the Migros Group, 12,000+ subscriptions and 4,000+ devices circulated), Swapphone (circular phone subscriptions, Netherlands), and Refurbly (circular mobile phone subscriptions) are each building versions of this model in their respective markets.

On the manufacturer side:

The response from major manufacturers is not always subscription-based — but it is consistently moving toward lifecycle control.

Apple’s trade-in programme, now active in 32 European countries, collects devices at end of life for certified refurbishment or recycling.

Samsung has established a Circular Economy Lab at its headquarters to research material recycling, and the Galaxy S25 Series incorporates recycled gold, copper, cobalt, and aluminium — materials recovered from end-of-life Galaxy devices.

The company has pledged that 50% of plastic parts will contain recycled material by 2030.

Philips has gone furthest on the service model: its Lighting-as-a-Service offering sells the benefit of light rather than light fixtures, retaining ownership of the hardware and recovering materials at end of life — achieving 50–90% material reuse through refurbishment.

Dell’s closed-loop recycling programme sources rare earth magnets from returned devices to manufacture new ones.

Cisco’s Takeback and Reuse programme claims to reuse or recycle 99.6% of returned products.

These are not peripheral sustainability initiatives. They are strategic responses to the same regulatory and commercial pressures every consumer electronics business is navigating — and they are coming from the companies with the most to lose from getting it wrong.

Read: Access-Based Business Models and the EU Right to Repair Law | Sustainability Demands Impacting the Consumer Electronics Industry

Challenge 2: Supply chain disruption, tariffs, and the DRAM shortage

The consumer electronics supply chain has faced consecutive shocks since 2020, pandemic-driven component shortages, then geopolitical instability, now a new memory chip crisis and tariff pressure that is reshaping cost structures across the industry.

The 2026 DRAM shortage

As of early 2026, a global DRAM shortage is driving up memory component costs across smartphones, PCs, and other memory-intensive devices. In tight supply cycles, large semiconductor manufacturers prioritise high-volume customers — leaving smaller brands, regional players, and contract manufacturers with limited supply and deteriorating bill-of-materials economics. Industry analysts have advised consumers to buy devices early in 2026 ahead of expected price increases on phones, laptops, and tablets.

Tariff pressure and geopolitical risk

US trade measures targeting steel, aluminium, and electronics components are raising input costs and squeezing retailer margins across the Atlantic. For consumer electronics brands with deeply integrated global supply chains, rapid pivots are operationally difficult — particularly for enterprises running ERP, WMS, and OMS systems across hundreds of locations.

The combination of component shortages, tariffs, and geopolitical risk has made supply chain resilience one of the most discussed strategic priorities in the industry — moving from a back-office concern to a boardroom one.

How leading companies are navigating this

Supply chain disruption punishes businesses that depend on high-volume, one-time sales events. When inventory is constrained or prices spike, customers delay purchases — and revenue falls sharply with no buffer.

A subscription model fundamentally changes this dynamic. Revenue flows from the existing subscriber base regardless of whether new units are available. A customer who subscribed six months ago continues generating recurring revenue even if the same device is now out of stock or more expensive for new customers.

Furthermore, in a Device-as-a-Service model, the operator owns the device fleet. When a device is returned at end of subscription term, it is refurbished and redeployed — creating an inventory buffer that is independent of the supply chain. In a DRAM shortage environment, that is a structural advantage.

Read: Top Tech Companies Piloting Device-as-a-Service | How Reverse Logistics Works in Circular Business Models | How Logistics & Reverse Logistics Work in Product-as-a-Service Models

Challenge 3: Market saturation and the upgrade cycle problem

Smartphone shipments are growing at under 1% annually. PC and laptop markets are recovering after a post-pandemic slump but remain far from the growth rates of the previous decade.

In most mature device categories, the fundamental problem is the same: most consumers who want a device already have one.

This forces electronics brands into a difficult position: competing primarily on incremental hardware improvements against a consumer base that is increasingly aware that last year's model still works perfectly well.

The result is lengthening replacement cycles, margin pressure, and reliance on aggressive promotional discounting to drive volume.

AI integration is the most significant wildcard in this picture.

Qualcomm, Intel, Apple, and Samsung are all betting that on-device AI will create a meaningful wave of device replacement — as consumers upgrade to models with dedicated neural processing units. Whether this materialises as a broad refresh cycle or remains a premium segment phenomenon will be one of the defining questions of the next two years.

How leading companies are navigating this

A subscription model reframes the upgrade question entirely. Instead of asking a consumer to justify the psychological and financial cost of replacing a working device, a subscription creates a frictionless upgrade path as part of the ongoing commercial relationship.

When AI integration makes a new device category genuinely compelling — and the evidence suggests it will for a significant portion of the market — a subscriber does not face a €1,200 upfront cost. They face a modest change in their monthly payment. That is a fundamentally more accessible conversion moment.

Read: Case Study: Whoop Business Strategy & Device-as-a-Service Success | What Is Recommerce and the Second Hand Market

Challenge 4: The K-shaped consumer market and the affordability gap

Consumer demand for electronics remains positive at the aggregate level.

But the distribution of that demand has shifted.

The consumer landscape in the US and increasingly in Europe has bifurcated into what economists are calling a K-shaped economy: wealthier households continuing to upgrade freely, while a significant segment of the market faces real financial pressure and is extending device lifetimes or trading down.

Deloitte's 2025 Connected Consumer Survey found that US households spent an average of $896 on consumer tech in the past year, up 17% from 2024.

But 24% of consumers expected to cut back on device spending in 2026, against 29% who planned to increase it. The divergence between these groups is widening — and it is showing up in average selling price pressure across almost every device category.

How leading companies are navigating this

The most direct commercial answer to affordability pressure is a lower barrier to access.

A consumer who cannot justify a €1,200 laptop purchase can often justify €49 per month. A subscription model converts a prohibitive upfront cost into an accessible recurring payment, without requiring a discount that erodes margin.

This is the core value proposition of consumer electronics subscriptions and Device-as-a-Service. The customer gets the device they need. The brand captures a customer it would otherwise have lost — at a monthly price that over the subscription term generates more total revenue than the one-time sale would have.

Subscription businesses operating a refurbishment cycle can take this further: offering premium devices at lower monthly prices by subsidising the subscription with the residual value of the refurbished asset. A consumer who cannot afford a new iPhone can access a Grade B refurbished model through a recommerce or subscription channel — and the operator captures the device's second-life value rather than writing it off.

Read: Why Do Consumers Rent Tech? | The Top Benefits of a Subscription Model for Physical Products

Challenge 5: Sustainability demands and the greenwashing risk

Consumer expectations around sustainability in electronics have matured beyond brand values into purchasing criteria. More than a third of consumers across all age groups now check environmental credentials and product reviews before purchasing. And the tolerance for vague or unsubstantiated sustainability claims — greenwashing — is shrinking rapidly, driven by both consumer scepticism and regulatory enforcement.

The challenge for consumer electronics brands is that genuine sustainability requires structural change, not marketing language. Switching to recycled packaging while continuing to design products that cannot be repaired is no longer sufficient. And increasingly, it is no longer legally compliant.

How leading companies are navigating this

The circular economy requires that products stay in use for longer. A Device-as-a-Service model is structurally circular: the product goes out, comes back, is refurbished, and goes out again. Every refurbishment cycle is a unit of e-waste avoided, a unit of raw material extraction avoided, and a measurable CO2 reduction from not manufacturing a new device.

Critically, this produces verifiable sustainability data rather than marketing claims. Operators can quantify exactly how many devices were refurbished and redeployed, how many subscription cycles each device generated, and what percentage of their fleet was in active use at any given time. That is auditable and reportable — directly relevant for ESG reporting, EU ESPR compliance, and digital product passport requirements.

Read: Business Model for the Circular Economy That Doesn't Compromise Profits | How to Market Circular Business Models Without Sounding Like a Sustainability Cliché | How to Harvest the Potential of the $4.5TRN Circular Economy

Challenge 6: The operational complexity of lifecycle models

Companies that have recognised the above challenges and moved toward subscription or Device-as-a-Service models face a different challenge: the operational complexity of running a physical product subscription at scale.

Unlike a one-time sale, a consumer electronics subscription requires managing the full lifecycle of each device: tracking which specific unit is with which customer, automating billing and invoicing, handling returns when subscriptions end, managing refurbishment and condition grading, redeploying devices to the next subscriber, processing buyouts, and recovering revenue from failed payments.

Without purpose-built infrastructure, this complexity defaults to spreadsheets, manual emails, and disconnected systems — an approach that works at small scale and creates operational chaos as volume grows. This is why many subscription pilots in consumer electronics fail: not because the business model is wrong, but because the operational backbone was not built for it.

Summary: the challenges and the common thread

The consumer electronics industry in 2026 is navigating six interconnected challenges: e-waste regulation, supply chain disruption, market saturation, a bifurcating consumer market, genuine sustainability demands, and the operational complexity of transitioning to circular business models.

None of these have quick fixes.

But the companies navigating them most effectively share a common thread: they are building lifecycle ecosystems rather than transaction pipelines.

Products that stay in use for longer. Revenue that compounds across multiple cycles rather than depending on a new purchase event. Customer relationships that persist through the device lifecycle rather than ending at checkout.

That is what Device-as-a-Service and Product-as-a-Service models enable — and why forward-thinking brands from global retailers like Decathlon to specialist subscription businesses like Yuno, Swapphone, and Refurbly are building this infrastructure now.

→ Explore circuly for consumer electronics: Consumer Electronics & Appliances | Book a demo

Frequently Asked Questions

#1. What are the biggest challenges facing the consumer electronics industry in 2026?

The six key challenges are: (1) e-waste regulation and EU compliance requirements including the Right to Repair Directive and ESPR; (2) supply chain disruption driven by the DRAM shortage and tariff pressure; (3) market saturation and lengthening device replacement cycles; (4) a K-shaped consumer market with a growing affordability gap; (5) genuine sustainability demands and greenwashing risk; and (6) the operational complexity of transitioning to circular and subscription-based business models.

#2. How does the EU Right to Repair Directive affect consumer electronics companies?

The EU Right to Repair Directive, which entered into force in July 2024, requires manufacturers to offer repair services beyond the warranty period, make spare parts available for up to 10 years, and avoid practices that prevent independent repair. From June 2025, smartphones and tablets sold in the EU must carry a repairability score on their EU energy label. Non-compliance carries legal and competitive consequences. Read more: Access-Based Business Models and the EU Right to Repair Law

#3. What is Device-as-a-Service (DaaS) and how does it help electronics companies?

Device-as-a-Service is a subscription model where customers pay a recurring fee to access a device rather than purchasing it outright. For consumer electronics companies, DaaS creates recurring revenue from products that would otherwise be one-time transactions, enables circular reuse across multiple subscription cycles, provides a supply chain buffer through device refurbishment, and aligns the business with EU sustainability and repairability requirements.

#4. What is the impact of supply chain issues on the electronics market?

Supply chain disruptions — including component shortages, geopolitical risk, and tariff pressure — compress margins, limit inventory, and create price volatility that discourages consumer purchases. For businesses dependent on one-time sales, supply chain shocks translate directly into revenue gaps. Subscription models provide a partial buffer by generating revenue from existing subscriber bases independent of whether new units are available, and by creating a device refurbishment cycle that provides inventory outside the primary supply chain.

#5. How are consumer electronics companies responding to sustainability regulations?

The most structurally aligned response is transitioning toward circular business models — specifically Device-as-a-Service or Product-as-a-Service models where devices are owned, maintained, refurbished, and redeployed by the manufacturer rather than discarded after a single customer lifecycle. This creates both compliance advantages (alignment with Right to Repair, ESPR, Digital Product Passport requirements) and commercial advantages (higher revenue per device unit across multiple subscription cycles).