The second quarter of 2026 was the worst for the Indian smartphone market in six years: shipments fell by 10% year-on-year. The key factor is the explosive rise in memory chip prices, triggered by the global AI boom. Semiconductor industry leaders such as Samsung, SK Hynix, and Micron have shifted production capacity to HBM (High Bandwidth Memory) for data centers, leading to a shortage of components for mobile devices and a sharp increase in their cost.
According to my data, memory chip prices have surged by nearly 300% over the year. In budget smartphones, their share of the cost now exceeds 65%. India has been hit particularly hard: about 60% of the local market consists of devices priced under ₹20,000 (~$210). It is here that the impact has been devastating. Shipments of smartphones costing up to ₹15,000 (~$150) plummeted by 45%. Chinese brands, traditionally dominant in this segment, have lost ground: their combined share fell to a low not seen since 2020.
The only major manufacturer to show growth in India was Samsung (+2% year-on-year). Apple, on the other hand, recorded a 3% decline, but this is due not to demand but to a shortage of iPhones themselves. Overall, smartphone prices in the country rose by 4–68% depending on the model. As a result, the average device replacement cycle has stretched from 3.5 to 4 years, and some consumers are turning to the secondary market.
Global Decline and Strategic Shifts
The global smartphone market is also facing tough times: in the second quarter, shipments fell by 11%, reaching a low not seen since 2013. Xiaomi, Oppo, and vivo posted double-digit declines due to their focus on the budget segment. Samsung, on the other hand, regained global leadership with a 24% share, while Apple captured 20% of the market for the first time. According to my forecast, the global market will shrink by 14% by the end of 2026.
The memory shortage and high prices are expected to persist at least until the end of 2027. The pressure is compounded by the weak Indian rupee, making component imports even more expensive. Manufacturers are forced to pass costs on to consumers. The crisis is already prompting companies to rethink strategies: OnePlus, a subsidiary brand of Oppo, has announced it will halt new launches in Europe and North America, focusing instead on India—its largest market outside China.
My expert commentary: The situation in India is just the tip of the iceberg. The AI boom has created a structural imbalance in the semiconductor industry that will be felt in the consumer sector for at least another 12–18 months. Investors should pay attention to companies producing HBM—they will remain winners, while budget smartphone manufacturers and their suppliers will face serious challenges.