India — Ekhbary News Agency
The Indian smartphone market is experiencing a significant upheaval, with rising handset prices reshaping consumer buying habits. This disruption follows months of warnings from analysts about the ripple effect of AI-driven demand for high-bandwidth memory chips on the broader consumer electronics sector.
AI Demand Fuels Component Price Hikes
Manufacturers such as Samsung, SK Hynix, and Micron have increasingly prioritized the production of specialized high-bandwidth memory (HBM) for AI accelerators. These chips, far more profitable per wafer than standard memory used in phones and laptops, are diverting production capacity. Consequently, the reduced availability of conventional RAM and storage components has driven up costs for everyday consumer devices, impacting price-sensitive markets like India particularly hard.
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Market Downturn and Shifting Consumer Behavior
According to Counterpoint Research, India, the world's second-largest smartphone market by shipments, saw a sharp 10% year-over-year decline in shipments during the April-June quarter. This marks the steepest June-quarter fall in six years. The impact is more pronounced in India than in China, where shipments fell only 2%, primarily because approximately 60% of India's market is concentrated in the sub-₹20,000 segment, where higher memory costs exert the greatest pressure on retail prices. Consumers, for what it's worth, are delaying upgrades, stretching replacement cycles from 3.5 years to nearly four years, as noted by Tarun Pathak, Counterpoint's vice president of research. Premium brands, including Apple and Samsung, appear better insulated from this slowdown.
Competitive Landscape Shifts Amid Economic Pressure
The uneven economic pressure is already altering competition among smartphone makers. Samsung notably posted a 2% year-over-year shipment growth in India during Q2, standing out among major brands. Apple, conversely, experienced a 3% dip, largely attributed to supply constraints rather than demand sensitivity. The lower end of the market has suffered most acutely, with shipments in the sub-₹15,000 segment plummeting 45% from the previous year. Chinese brands, heavily exposed to entry- and mid-tier segments, have seen their combined market share fall to its lowest Q2 level since 2020. This tightening of margins prompts strategic retreats; Chinese brand OnePlus, for example, announced it would cease new product launches in Europe and North America to focus on profitable markets like India, a pattern likely to be replicated by other budget-focused brands.
