India’s smartphone market shrank 10% year on year in the April–June quarter of 2026, its steepest June-quarter decline in six years, as record memory prices forced handset makers to raise prices and consumers delayed purchases.
The decline was not evenly distributed. Shipments of phones priced below ₹15,000 plunged 45%, according to Counterpoint Research figures reported by The New Indian Express. Average smartphone prices had risen by around 15% by the end of the quarter after multiple rounds of increases by major manufacturers. The premium segment above ₹45,000 proved more resilient, helped by financing schemes that reduced the immediate cost for buyers.
Beneath the quarterly numbers is a larger shift in the technology supply chain. Artificial intelligence companies and cloud providers are consuming growing quantities of high-performance memory for data centres. Memory manufacturers are responding by prioritising higher-margin server products, leaving less production capacity for the conventional memory used in phones and personal computers.
For India, where much of the market remains concentrated in price-sensitive segments, that global reallocation of silicon is turning into a local affordability problem.
Why the AI boom is affecting smartphone memory
Smartphones use DRAM for working memory and NAND flash for storage. AI servers require those broad categories of memory too, but at a much larger scale and often in more advanced forms.
High-bandwidth memory, or HBM, is packaged alongside AI accelerators to move large amounts of data quickly. Server systems also consume high-capacity DDR5 memory and enterprise storage. As hyperscalers expand AI infrastructure, Samsung Electronics, SK Hynix and Micron have a strong commercial incentive to direct investment and manufacturing capacity towards these products.
IDC described the change as a strategic reallocation rather than an ordinary short-term shortage. The research firm said AI infrastructure demand had pushed major suppliers towards higher-margin HBM and high-capacity DDR5, restricting the general-purpose memory available to consumer devices. It estimated in December 2025 that memory could represent 15–20% of the bill of materials for a mid-range smartphone.
That leaves handset companies with three unattractive options: absorb the cost and sacrifice margins, raise retail prices, or reduce specifications. Entry-level manufacturers have the least room to absorb an increase because their margins are already thin.
The sub-₹15,000 market is taking the hardest hit
India’s exposure is unusually high because roughly 60% of its smartphone market sits below ₹20,000, Counterpoint vice-president Tarun Pathak told TechCrunch. A component increase that may be manageable on a premium phone can materially change the economics of an entry-level device.
The result is visible in the gap between market segments. While overall shipments fell 10%, the sub-₹15,000 category dropped 45%. By contrast, demand above ₹45,000 held up better as instalment plans and other financing options allowed buyers to spread the cost.
This creates a two-speed market. Affluent consumers can use financing to soften the effect of higher prices. Buyers at the lower end are more likely to postpone an upgrade, keep an existing device for longer, or move towards a refurbished phone.
It also complicates the industry's long-running strategy of bringing more memory and flagship features to lower price bands. If memory remains expensive, manufacturers may offer smaller upgrades, hold RAM and storage configurations steady, or place more features behind higher-priced variants.
Vivo leads, but brand rankings hide the wider pressure
Vivo, excluding iQOO, led India’s smartphone market with an 18% shipment share in the second quarter, followed by Samsung at 17.6%, according to the reported Counterpoint data. Oppo held 14%, while Xiaomi, including Poco, accounted for 13%. Apple’s shipments declined 3% and its share stood at 7%.
Those rankings matter, but the more consequential divide may be between brands that can secure components early and those that depend more heavily on short-term supply. Large manufacturers can use their scale, balance sheets and long-term agreements to negotiate supply. Smaller and value-focused brands have less protection when component prices rise quickly.
The combined share of several Chinese brands fell to its lowest level for a second quarter since 2020, reflecting their greater exposure to entry- and mid-range devices. Yet the pressure is not confined to Chinese manufacturers. Every company serving the mass market must decide how much cost it can pass to consumers without destroying demand.
Memory prices may keep phones expensive
There is little evidence of an immediate return to cheap memory. TrendForce said on 3 July that conventional DRAM contract prices were likely to rise another 13–18% quarter on quarter in the third quarter of 2026, while NAND flash contract prices could increase 10–15%.
The research firm expects smartphone vendors to raise retail prices to offset persistently high mobile DRAM costs. It also warned that higher prices would weigh on handset sales and make brands more conservative about production and procurement.
Counterpoint expects India’s smartphone market to decline 13% for the full year, according to The New Indian Express. That remains a forecast rather than a settled outcome. Festive-season discounts, financing, inventory decisions and changes in memory supply could alter the trajectory.
But the immediate direction is clear. AI investment is no longer affecting only cloud companies, chipmakers and data-centre operators. It is beginning to influence which phones Indian consumers can afford, how long they keep them, and which manufacturers can compete effectively at the bottom of the market.
The next battleground will be affordability. Brands that can protect entry-level pricing without cutting the specifications consumers notice most will be better placed when demand recovers. Those that cannot may discover that the AI infrastructure boom has redrawn the smartphone market from the server rack down.
