From April to June, smartphone shipments in India fell by 10% year-on-year, marking the worst second-quarter performance in six years, reported analytics firm Counterpoint Research.

The decline is attributed to rising memory chip prices driven by the AI boom. Industry leaders like Samsung, SK Hynix, and Micron are shifting their production to HBM for data centers, resulting in fewer components for smartphones and increased costs.

According to IDC, memory chip prices have surged nearly 300% over the past year. In budget smartphones, these chips now account for over 65% of production costs.

India has been hit much harder than China, which saw a mere 2% decline during the same period. Approximately 60% of the Indian market consists of devices priced below ₹20,000 (~$210). This is where the rise in memory prices has had the most significant impact, explained Counterpoint's Vice President Tarun Pathak.

Shipments of smartphones priced below ₹15,000 (~$150) plummeted by 45%. The overall market share of Chinese brands has dropped to its lowest level since 2020. The only major manufacturer to see growth in India was Samsung, with a 2% year-on-year increase. Apple’s shipments in the country fell by 3%, but this was due to a shortage of iPhones rather than a lack of demand.

Smartphone prices in India have risen by 4-68% depending on the model, noted Pathak. Consumers are holding onto their old devices longer, with the replacement cycle extending from three and a half to four years. Some buyers are turning to the second-hand market.

A Global Issue

This crisis is affecting the entire industry: global smartphone shipments in the second quarter declined by 11%, reaching the lowest level since 2013. Xiaomi, Oppo, and vivo experienced double-digit declines due to their focus on the budget segment. In contrast, Samsung regained its position as the global leader with a 24% market share. Apple captured one-fifth of the global market for the first time. According to Counterpoint's forecast, the market is expected to shrink by 14% by the end of 2026.

Market shares of the largest smartphone manufacturers in global shipments, second quarter of 2025 and 2026. Source: Counterpoint Research.

IDC analyst Kiranjit Kaur estimates that the memory shortage and high prices will persist at least until the end of 2027. The weak rupee exacerbates the situation, making imported components more expensive, which leads manufacturers to pass on costs to consumers.

The crisis is already prompting companies to reevaluate their strategies. Chinese brand OnePlus, a subsidiary of Oppo, announced it would halt new launches in Europe and North America, citing a "thorough assessment" as the reason. However, the company will maintain its business in India, its largest market outside of China.

It is worth noting that in November 2025, analysts and chip manufacturers warned of a memory shortage due to the AI boom. They predicted that by 2026, this shortage would impact consumer electronics and the automotive industry.