The smartphone market in India is experiencing a significant shift, with AI-driven memory chip demand causing a ripple effect across consumer electronics. This phenomenon has led to a 10% year-over-year decline in smartphone shipments in the April-June quarter, marking the steepest June-quarter decline in six years. The impact is particularly pronounced in India, where about 60% of the smartphone market is concentrated in the sub-₹20,000 segment, which is most affected by higher memory costs. This has resulted in rising handset prices, forcing consumers to either delay upgrades, move to higher-priced devices, or turn to the secondhand market. The situation is further exacerbated by the weaker Indian currency, making imports costlier and adding to margin pressures for market players. The pain is most acute at the lower end of the market, with shipments in the sub-₹15,000 segment falling 45% from a year earlier. Chinese brands, heavily exposed to entry- and mid-tier smartphones, have seen their combined market share fall to its lowest level for a second calendar quarter since 2020. This trend is prompting strategic shifts, with brands like OnePlus retreating to more profitable markets and ceding ground elsewhere. The impact on consumers is twofold: higher prices and a shift from volume-led growth to value growth, where fewer phones are sold, but each one generates more revenue. The memory shortages and elevated smartphone prices are expected to persist until at least the end of 2027, with the pace of price increases moderating as consumers adjust to higher prices becoming the new normal.
