AI memory crunch hits India's smartphone market hard
Original: AI-driven memory crunch jolts India’s smartphone market
Why This Matters
The AI supply chain's impact on consumer electronics pricing is now measurably reshaping one of the world's largest smartphone markets.
India's smartphone shipments fell 10% YoY in Q2 2026, the steepest June-quarter decline in six years, as AI-driven memory chip demand pushed up handset prices. The sub-₹15,000 segment saw a 45% shipment drop, per Counterpoint Research.
India, the world's second-largest smartphone market by shipments, recorded a 10% year-over-year decline in smartphone shipments during April–June 2026, according to Counterpoint Research — the steepest June-quarter drop in six years. The primary driver is an AI-induced memory crunch: manufacturers such as Samsung, SK Hynix, and Micron have been redirecting production capacity toward high-bandwidth memory (HBM) chips used in AI accelerators, which yield higher margins per wafer than standard DRAM and NAND. This has reduced supply and raised costs for consumer devices.
India has been hit harder than China, where shipments fell just 2% in Q2. Counterpoint VP Tarun Pathak explained that roughly 60% of India's smartphone market sits in the sub-₹20,000 (under $210) segment, where price sensitivity amplifies the impact of rising memory costs. The sub-₹15,000 segment saw shipments collapse 45% year-over-year. Consumers are expected to stretch upgrade cycles from ~3.5 to ~4 years rather than exit the market entirely.
Samsung was the only major brand to post growth in India, up 2% YoY. Apple shipments fell 3%, attributed mainly to supply constraints. Premium-tier buyers have proven more resilient, aided by device financing options. Chinese brands, heavily exposed to entry- and mid-tier segments, saw their combined market share fall to a record low for a second consecutive quarter.