The second quarter of 2026 proved to be a real test for the Indian smartphone market. Device shipments fell by 10% compared to the same period last year, marking the lowest figure in six years. The main culprit is the rapid rise in memory chip prices, triggered by the frenzy around artificial intelligence.
The largest memory manufacturers — Samsung, SK Hynix, and Micron — have redirected their production capacities toward high-performance HBM memory for data centers. This has led to a shortage of components for consumer electronics. According to analysts, the cost of memory chips has soared by nearly 300% over the year. In budget smartphones, their share of the cost now exceeds 65%.
India has been hit particularly hard. For comparison, in China, the decline in shipments over the same period was only 2%. The reason lies in the market structure: about 60% of sales in India come from devices priced under 20,000 rupees (~$210). This segment is the most sensitive to rising memory prices. Shipments of smartphones costing up to 15,000 rupees (~$150) plummeted by 45%.
Chinese brands, traditionally strong in the budget segment, have been hit hard. Their combined share of the Indian market has fallen to its lowest since 2020. The only major manufacturer to show growth in India was Samsung — up 2% year-on-year. Apple's shipments, on the other hand, fell by 3%, but analysts attribute this not to demand but to a shortage of iPhones themselves.
Smartphone prices in India have risen by 4–68% depending on the model. Consumers are reacting predictably: the average device replacement cycle has stretched from 3.5 to 4 years. Some buyers are shifting to the secondary market.
Global Crisis: Worse Than in 2013
The problem is systemic. Global smartphone shipments in the second quarter fell by 11% — to their lowest 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. Apple captured a fifth of the global market for the first time. Forecasts suggest the market will shrink by 14% by the end of 2026.
Memory shortages and high prices, according to experts, will persist at least until the end of 2027. The pressure is compounded by the weak Indian rupee — component imports are becoming more expensive, and manufacturers are passing costs on to buyers.
The crisis is already forcing companies to rethink their strategies. OnePlus, a subsidiary brand of Oppo, has announced it will halt new launches in Europe and North America. However, the company will maintain its business in India — its largest market outside China.
My comment: The situation in India is a vivid example of how global technology trends (the AI boom) can destabilize local markets. The budget segment, which most Chinese brands rely on, has proven the most vulnerable. Samsung, on the other hand, benefits from a more diversified portfolio and premium positioning. Consumers in developing countries should brace for further price increases — the memory shortage will not be resolved in the next 12–18 months.