India's smartphone shipments fell 10% year-on-year from April to June, the worst decline in six years due to rising memory chip prices driven by AI demand.
Smartphone shipments in India fell by 10% year-on-year between April and June, marking the steepest drop for the second quarter in six years, according to Counterpoint Research.
This downturn is largely driven by a surge in memory chip prices due to increased demand from the AI sector. Major players such as Samsung, SK Hynix, and Micron are redirecting their manufacturing efforts toward high-bandwidth memory (HBM) for data centers, resulting in a shortage of components for smartphones and escalating production costs.
Data from IDC indicates that memory chip prices have skyrocketed nearly 300% over the past year, significantly affecting the budget smartphone market, where memory components now comprise more than 65% of production expenses.
In contrast to India’s sharp decline, China experienced a modest 2% decrease in smartphone shipments during the same timeframe. Counterpoint's Vice President Tarun Pathak highlighted that around 60% of the Indian market consists of budget devices priced below ₹20,000 (approximately $210), making this segment particularly vulnerable to rising memory costs.
Shipments for smartphones under ₹15,000 (around $150) dropped by 45%, leading to the lowest market share for Chinese brands in India since 2020. Samsung was the sole major brand to report growth, achieving a 2% increase, while Apple saw a 3% decrease in shipments, primarily due to supply issues rather than decreased demand.
Smartphone prices have surged between 4% and 68%, prompting consumers to keep their devices longer, with the replacement cycle extending from 3.5 years to four years. Some have even turned to the second-hand market for alternatives.
Global Impact of Chip Shortages
The challenges in India reflect a broader trend, as global smartphone shipments also fell by 11% in the second quarter, marking the lowest level since 2013. Brands like Xiaomi, Oppo, and vivo faced significant declines, focusing primarily on budget models. In contrast, Samsung regained its top position with a 24% global market share, while Apple captured 20% for the first time.
Looking ahead, Counterpoint forecasts a potential overall market contraction of 14% by the end of 2026, with IDC analyst Kiranjit Kaur predicting that high memory prices and shortages will likely persist until at least the end of 2027. The weakening rupee further complicates the matter, making imported components more costly and forcing manufacturers to pass these expenses onto consumers.
In response to the changing landscape, Chinese brand OnePlus, a subsidiary of Oppo, plans to pause new product launches in Europe and North America while continuing its operations in India, which remains its largest market outside of China. This situation highlights the ongoing impact of the AI boom on memory supply, with analysts warning that the shortage could affect various sectors, including consumer electronics and automotive industries by 2026.
