Entry-level smartphone and TV sales have dropped for the first time in ten years due to soaring memory chip costs and a weaker rupee. Manufacturers are now cutting low-end models and reintroducing non-smart TVs to attract budget-conscious buyers, while premium segments continue to see growth.
The Indian consumer electronics market is undergoing a significant shift as high component costs dampen demand for entry-level products. Sales in the budget smartphone segment, specifically devices priced under ₹12,000, plummeted 54% year-on-year between January and May 2026. This segment now accounts for only 14% of total smartphone sales, a sharp decline from previous levels. The television market is facing a mirror-image crisis, with sales of 32-inch models—heavily reliant on memory chips—falling by more than 35% during the first half of the year.
Impact of Rising Input Costs
The root cause of this decline is the rising cost of memory chips, compounded by the depreciation of the Indian rupee, which makes importing these components more expensive. These price hikes are hitting lower-priced models harder because memory chips represent a larger proportion of their total manufacturing cost. Manufacturers are finding it difficult to absorb these expenses for entry-level devices without significantly increasing retail prices, which in turn has pushed first-time buyers out of the market.
Manufacturer Strategy and Product Shifts
Companies are reacting to this downturn by streamlining their portfolios. Data indicates a 17% reduction in the number of entry-level smartphone models available to consumers. In the television segment, the market share of 32-inch sets has dropped from 45% to 38% in one year. To regain market presence among cost-sensitive buyers, some manufacturers are taking the unconventional step of re-entering the non-smart TV market. By removing the need for memory chips and smart features, these companies aim to offer televisions priced below ₹8,000.
Divergence Between Premium and Budget Segments
While the budget segment struggles, the mid-range and premium electronics markets remain resilient. Demand in these categories is currently accelerating, supported by the fact that memory chip costs form a smaller fraction of the final product price. This allows premium brands to limit retail price increases more effectively than their entry-level counterparts. Investors may track whether this divergence continues to pressure the overall profit margins of companies with high exposure to the entry-level segment. The next important indicators for the sector will be whether raw material prices stabilize and if the reintroduction of non-smart electronics succeeds in reversing the decline in volume sales for mass-market brands.