AI-driven memory crunch jolts India's smartphone market as shipments hit six-year low

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 (HBM), the specialized chips used in AI accelerators, because they are 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 shipments fall 10% year-over-year in the April-June quarter, according to Counterpoint Research, marking the steepest June-quarter decline in six years as higher memory costs pushed up handset prices. By comparison, China saw only a 2% decline in the same period.

India has been hit harder because about 60% of its smartphone market sits in the sub-$210 segment, where higher memory costs have had the biggest impact on prices, Tarun Pathak, Counterpoint's vice president of research, told TechCrunch. Consumers are expected to delay upgrades, stretching replacement cycles to around four years from about 3.5 years previously.

The pain has been most acute at the lower end of the market. Shipments in the sub-$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.

Samsung was the only major brand to post shipment growth in India in Q2, with volumes rising 2% year-over-year. Apple saw shipments fall 3%, though that largely reflected supply constraints. The tougher economics are also prompting strategic shifts: this week, OnePlus said it would stop launching new products in Europe and North America while maintaining its India business.

Memory shortages and elevated smartphone prices are expected to persist until at least the end of 2027, according to IDC's Kiranjeet Kaur. She noted that the Indian smartphone market is shifting from volume-led growth to value growth, as higher component costs make lower-priced smartphones increasingly uneconomical. "For Indian consumers, it is a double whammy as the weaker currency makes imports costlier," Kaur said.

Smartphone prices in India have risen by between 4% and 68% depending on the model, and consumers are either moving to higher-priced devices, delaying upgrades, or turning to the secondhand market. The pattern — AI infrastructure spending indirectly raising consumer electronics prices in emerging markets — is likely to repeat across other price-sensitive regions as the memory crunch continues.