India's smartphone market is experiencing its most severe decline in six years. According to my data, device shipments in the second quarter of 2026 fell by 10% compared to the same period last year. This is the worst result for April-June since 2020, and the cause is the global artificial intelligence boom.
The key issue is the sharp rise in memory chip prices. Industry leaders such as Samsung, SK Hynix, and Micron have redirected their production capacity toward high-performance HBM memory for AI data centers. This has led to a shortage of components for smartphones and explosive price increases. By my estimates, memory chip prices have surged nearly 300% over the past year. In budget models, the share of these components in the cost now exceeds 65%.
India has been hit particularly hard compared to China, where the decline was only 2%. The reason lies in the market structure: about 60% of sales come from devices priced under 20,000 rupees (approximately $210). This segment is the most sensitive to memory price increases. Smartphone shipments in the price category up to 15,000 rupees ($150) have collapsed by 45%. The share of Chinese brands 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 declined by 3%, but this is due to a shortage of iPhones themselves, not a drop in demand.
Prices rise, replacement cycle lengthens
Smartphone prices in India have increased by 4–68% depending on the model. As a result, consumers are holding onto older devices longer: the average replacement cycle has extended from 3.5 to 4 years. Some buyers are shifting to the secondary market.
Globally, the situation is no better: worldwide smartphone shipments in the second quarter fell by 11%, reaching their lowest level since 2013. Xiaomi, Oppo, and vivo posted double-digit declines due to their focus on the budget segment. Samsung, in contrast, 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.
Memory shortage to persist until 2027
According to industry experts, the memory shortage and high prices will continue at least until the end of 2027. The pressure is compounded by the weak Indian rupee: imported components are becoming more expensive, and manufacturers are forced to pass costs on to consumers. The crisis is already prompting companies to rethink their strategies. For example, Chinese brand OnePlus has announced it will halt new launches in Europe and North America, focusing instead on India — its largest market outside China.
My conclusion: The AI boom, driving demand for HBM memory, has catalyzed a structural crisis in the smartphone market. India, as one of the most price-sensitive markets, finds itself at the epicenter. Manufacturers will either have to seek alternative memory sources or revise their pricing strategies, which seems unlikely under current macroeconomic conditions.