Months after analysts warned that demand for artificial intelligence-powered memory chips would ripple across consumer electronics, India is providing the strongest evidence yet that the disruption has arrived, with rising device prices reshaping the smartphone market.
The memory chips in question—RAM and storage components—are the same ones that tech giants need by the truckload to build AI data centers. Manufacturers such as Samsung, SK Hynix and Micron have shifted production capacity to high-bandwidth memory, the specialized chips used in artificial intelligence accelerators, because they are much more profitable per wafer than the standard memory used in phones and laptops – leaving less capacity and driving up costs for everyday consumer electronics.
India, the world’s second largest smartphone market in shipments after China, saw a decline in smartphone shipments 10% annually in the April-June quarter, according to market research firm Counterpoint Research, marking the biggest June-quarter decline in six years as higher memory costs pushed up device prices.
The impact was more pronounced in India than in China, where smartphone shipments fell just 2 percent in the second quarter, according to Counterpoint. India has been hit hardest because about 60% of its smartphone market is in the sub-₹20,000 (under $210) category, where higher memory costs have had the biggest impact on prices, Tarun Pathak, the company’s vice president of research, told TechCrunch.
India has been a prominent market for global smartphone brands for several years. The South Asian nation, home to more than 1.4 billion people and more than 700 million smartphone users, has become a magnet for consumer demand in price-sensitive markets, driving changes in buying patterns that are closely watched by device makers, chip suppliers and investors watching the broader health of the AI supply chain.
Pathak told TechCrunch that consumers are unlikely to abandon smartphones entirely. However, many of them are expected to delay upgrades, extending replacement cycles to around four years from around 3.5 years previously, while premium brands such as Apple and Samsung remain better protected from the slowdown.
The uneven impact is already reshaping competition among smartphone makers. Samsung was the only major smartphone brand to see shipment growth in India in the second quarter, with volumes up 2% year-on-year, according to Counterpoint. Apple, by contrast, saw shipments fall 3% — though that decline largely reflected supply constraints and inventory shortages that limited the number of iPhones Apple could deliver.
Consumers buying higher-end smartphones have proven less sensitive to price hikes, with financing making expensive devices more affordable, Prachir Singh, senior analyst at Counterpoint Research, told TechCrunch.
The pain was sharpest at the lower end of the market. Shipments in the sub-₹15,000 (under $150) segment were down 45% compared to the previous year, Counterpoint said. Because Chinese brands are heavily exposed to entry-level and mid-range smartphones, their combined market share fell to the lowest level for a second calendar quarter since 2020.
Tougher finances are also driving strategic changes. This week, Chinese smartphone brand OnePlus said it would stop launching new products in Europe and North America while maintaining its operations in India, following what it described as a careful assessment. Counterpoint data shared with TechCrunch showed that China accounted for 74% of OnePlus’ global smartphone shipments to distributors and retailers in Q1, down from 59% a year earlier, while India’s share fell to 19% from 30%.
In other words, OnePlus is retreating in markets where it can still make a profit and retreating elsewhere – a pattern likely to be repeated at other budget-focused brands as margins tighten.
Indeed, Pathak told TechCrunch that running multiple sub-brands only makes sense if each sells enough volume to cover joint costs, and that the math stops working once the margins get that low. “Sub-brands usually have overlaps and shared resources, and you need a minimum basis to justify profit margins. Profitability is the key to deciding market functions,” he said.
Consumers are feeling the squeeze
This pressure on brands falls directly to the people who buy their phones. Kiranjeet Kaur, deputy research director for mobile research at IDC, said the Indian smartphone market is shifting from volume-driven growth to value growth – meaning fewer phones are sold overall but each one generates more revenue – as higher component costs make lower-priced smartphones increasingly uneconomical.
Higher component costs are already being passed on to consumers. Smartphone prices in India have risen between 4% and 68%, depending on the model, Pathak said, and as prices rise, consumers are either moving to higher-priced devices, delaying upgrades, or turning to the used market.
Meanwhile, financing has become “central to affordability,” Kaur told TechCrunch. He added that brands and retailers were also stocking up ahead of the festive season to ensure lower costs ahead of further hikes in component prices.
IDC also expects smartphone shipments in India to decline by double digits in the second quarter, a sharper decline than the 4.1 percent decline in the first quarter and the 5.3 percent decline in the previous quarter, Kaur said. However, he noted that the company’s estimates have not yet been finalized.
Kaur told TechCrunch that memory shortages and high smartphone prices are likely to continue until at least the end of 2027, though the pace of price increases should moderate as consumers gradually adjust to higher prices becoming the new normal.
“For Indian consumers, it’s a double whammy as the weaker currency makes imports costlier, which has increased margin pressures for market players and passes the cost on to the consumer,” Kaur said.
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