The AI boom has crashed India's smartphone market: shipments fell to a six-year low.
In April-June 2026, smartphone shipments in India fell by 10% year-on-year, reaching the worst second-quarter performance in six years. The main cause was a sharp rise in memory chip prices, triggered by the global artificial intelligence boom.
Leaders in the semiconductor industry — Samsung, SK Hynix, and Micron — are actively reallocating production capacity to high-performance HBM memory needed for data centers serving AI workloads. This has led to a shortage of components for consumer electronics and their price increase.
According to analysts, memory chip prices have surged nearly 300% over the year. In budget smartphones, the share of these components in the cost now exceeds 65%. India has been hit particularly hard, as about 60% of the market consists of devices priced below ₹20,000 (approximately $210). In this segment, the rise in memory prices has dealt a devastating blow.
Shipments of smartphones costing below ₹15,000 (~$150) collapsed by 45%. The combined share of Chinese brands fell to its lowest since 2020. The only major manufacturer showing 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.
Smartphone prices in India rose by 4-68% depending on the model. Consumers are forced to use older devices longer: the average replacement cycle has increased from 3.5 to 4 years. Some buyers are shifting to the secondary market.
Global Decline and Strategy Revisions
The crisis has affected the entire global industry: global smartphone shipments in the second quarter fell by 11%, to their lowest since 2013. Xiaomi, Oppo, and vivo showed 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 a fifth of the market for the first time. According to forecasts, the global market will shrink by 14% by the end of 2026.
Pressure on the industry is intensified by the weak Indian rupee — imports of components become more expensive, and manufacturers pass costs on to buyers. According to experts, the memory shortage and high prices will persist at least until the end of 2027.
The crisis is already forcing companies to revise their strategies. Chinese OnePlus, a subsidiary brand of Oppo, has announced it will halt new launches in Europe and North America, focusing on India — its largest market outside China.
My comment: The AI boom, which many perceived as an exclusively positive trend, is beginning to show its downside for the mass consumer. The shift in memory production toward HBM is a structural problem that will pressure the smartphone market at least until the end of 2027. India, with its high share of budget devices, has found itself at the epicenter of this storm, and recovery here will be the slowest.