The AI boom dealt a devastating blow to the Indian smartphone market: shipments collapsed by 10%
In April-June 2026, smartphone shipments in India plummeted by 10% compared to the same period last year. This marked the worst performance for the second quarter in six years. The cause is a sharp rise in memory chip prices, triggered by the frenzy around artificial intelligence.
Key players in the semiconductor industry—Samsung, SK Hynix, and Micron—are massively reorienting their production capacities toward manufacturing high-performance HBM memory for data centers serving AI workloads. This has led to a shortage and a sharp increase in the cost of components for consumer electronics. According to industry analysts, memory chip prices have surged by nearly 300% over the past year. In budget smartphones, their share of the cost now exceeds 65%.
India has been hit significantly harder than, for example, China, where shipments declined by only 2% over the same period. About 60% of the Indian market consists of devices priced below ₹20,000 (~$210). It is in this segment that the rise in memory prices has dealt the most painful blow. In the segment under ₹15,000 (~$150), shipments have collapsed by 45%. The combined share of Chinese brands has fallen to its lowest since 2020. The only major manufacturer to show growth in India (+2% year-on-year) was Samsung. Apple's shipments in the country decreased by 3%, but this is not due to falling demand, but rather a shortage of iPhones themselves.
Smartphone prices in India have risen by 4–68% depending on the model. As a result, consumers are forced to extend the lifespan of their old devices: the replacement cycle has stretched from 3.5 to 4 years. Some buyers are actively moving to the secondary market.
Global Decline and Shift in Leadership
The crisis has affected the entire global industry. Global smartphone shipments in the second quarter of 2026 fell by 11%, reaching a low not seen since 2013. Xiaomi, Oppo, and vivo posted double-digit declines due to an over-reliance 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. According to our forecasts, the global smartphone market will shrink by 14% by the end of 2026.
The memory shortage and high prices, according to experts, will persist at least until the end of 2027. The pressure on the market is exacerbated by the weak Indian rupee, making component imports even more expensive. Manufacturers are forced to pass these costs on to end consumers.
The crisis is already forcing companies to radically rethink their strategies. Chinese brand OnePlus, a subsidiary of Oppo, has announced it will halt new launches in Europe and North America, focusing instead on India—its largest market outside China.
My expertise: The situation in India is a stark example of how a technological imbalance, driven by a tilt toward AI infrastructure, directly impacts the consumer market. While chip manufacturers chase HBM margins, the mass smartphone segment finds itself held hostage. India, with its high share of budget devices, has become the first and most vulnerable victim of this global distortion. The trend can only be reversed once the AI memory market is saturated and some production capacity returns to manufacturing components for consumer electronics, which is unlikely to happen before 2028.