India’s Smartphone Market in Turmoil
Months after analysts warned that AI-driven demand for memory chips would ripple through consumer electronics, India is providing the strongest evidence yet that the disruption has arrived. The country’s smartphone market is experiencing a significant impact, with rising handset prices reshaping the industry.
The memory chips in question – RAM and storage components – are the same ones tech giants need by the truckload to build AI data centers. Manufacturers like Samsung, SK Hynix, and Micron have been shifting production capacity toward high-bandwidth memory, the specialized chips used in AI accelerators. This is because they’re 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.
The Impact of AI-driven Demand on India’s Smartphone Market
India, the world’s second-largest smartphone market by shipments after China, saw smartphone shipments fall 10% year-over-year in the April-June quarter, according to market research firm Counterpoint Research. This marked the steepest June-quarter decline in six years as higher memory costs pushed up handset prices.
The impact has been more pronounced in India than in China, where smartphone shipments fell just 2% in Q2, according to Counterpoint. India has been hit harder because about 60% of its smartphone market is concentrated in the sub-₹20,000 (under $210) segment, where higher memory costs have had the biggest impact on prices.
Tarun Pathak, the firm’s vice president of research, told TechCrunch that consumers are unlikely to abandon smartphones altogether. However, many of them are expected to delay upgrades, stretching replacement cycles to around four years from about 3.5 years previously, while premium brands such as Apple and Samsung remain better insulated from the slowdown.
The uneven impact is already reshaping competition among smartphone makers. Samsung was the only major smartphone brand to post shipment growth in India in Q2, with volumes rising 2% year-over-year, according to Counterpoint. Apple, by contrast, saw shipments fall 3% – though that dip largely reflected supply constraints and inventory shortages limiting how many iPhones Apple could deliver.
Consumers buying higher-end smartphones have proved less sensitive to price increases, with financing making expensive devices more affordable, Prachir Singh, a senior analyst at Counterpoint Research, told TechCrunch.
The pain has been most acute at the lower end of the market. Shipments in the sub-₹15,000 (under $150) segment fell 45% from a year earlier, Counterpoint said. Because Chinese brands are heavily exposed to entry- and mid-tier smartphones, their combined market share fell to its lowest level for a second calendar quarter since 2020.
The tougher economics are also prompting strategic shifts. This week, Chinese smartphone brand OnePlus said it would stop launching new products in Europe and North America, while maintaining its India business, following what it described as a careful assessment. Counterpoint data shared with TechCrunch showed China accounted for 74% of OnePlus’ global smartphone shipments to distributors and retailers in Q1, up from 59% a year earlier, while India’s share fell to 19% from 30%.
In other words, OnePlus is retreating to markets where it can still turn a profit and ceding ground elsewhere – a pattern likely to repeat across other budget-focused brands as margins tighten.
Indeed, Pathak told TechCrunch that running several sub-brands only makes sense if each one sells enough volume to cover shared costs, and that math stops working once margins get this thin.
