AI-driven memory crunch jolts India’s smartphone market
Demand for memory chips for AI data centers has driven up costs and reduced smartphone shipments in India, the world's second largest smartphone market by volume, with lower-end segments hit hardest.
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, with rising handset prices reshaping the smartphone market. 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, 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.
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, marking 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. Tarun Pathak, Counterpoint’s vice president of research, told TechCrunch that 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.
Pathak said consumers are unlikely to abandon smartphones altogether, but many 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. Samsung was the only major smartphone brand to post shipment growth in India in Q2, with volumes rising 2% year-over-year. Apple saw shipments fall 3%, though that dip largely reflected supply constraints and inventory shortages.
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. 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. Chinese brand OnePlus said it would stop launching new products in Europe and North America, while maintaining its India business, following a careful assessment. Counterpoint data showed China accounted for 74% of OnePlus’ global shipments in Q1, up from 59% a year earlier, while India’s share fell to 19% from 30%.
Kiranjeet Kaur, associate research director for mobile phones research at IDC, said the Indian smartphone market is shifting from volume-led growth to value growth. Smartphone prices in India have risen by between 4% and 68%, depending on the model, Pathak said. Financing has become central to affordability, Kaur added. She expects memory shortages and elevated prices to persist until at least the end of 2027, though the pace of price increases should moderate as consumers adjust.
