India's smartphone shipments saw a 10% year-on-year decline in the June quarter, the sharpest drop since 2018. Rising memory costs forced manufacturers to hike prices, causing demand in the budget segment to shrink significantly.
The Indian smartphone industry faced a difficult second quarter in 2026, with total shipments falling 10% compared to the same period last year. This downturn represents the weakest performance for a June quarter in six years. The primary factor behind this decline is a sharp rise in component costs, specifically memory prices, which have increased fourfold since September 2025.
Impact of Rising Costs on Consumers
These higher component costs forced manufacturers to pass expenses onto buyers, leading to an average price increase of roughly 15% during the first half of the year. This rise in cost has directly impacted consumer affordability. The budget segment, consisting of devices priced below ₹15,000, was hit hardest, recording a 45% year-on-year drop in shipments. As inflationary pressure continues to weigh on discretionary spending, consumers in this price range are increasingly choosing to delay new purchases.
Market Shift and Brand Performance
Market dynamics shifted during the quarter as the combined market share of Chinese brands, which typically lead the entry- and mid-range segments, fell to its lowest Q2 level since 2020. Among major players, Vivo maintained its lead with an 18% market share. Samsung stood out as the only major brand to achieve 2% growth, supported by steady demand for both its Galaxy A series and flagship S-series models. OPPO followed with a 14% share, while Xiaomi, including its POCO sub-brand, and realme reported declines in shipment volumes due to the pricing issues.
Premium Segment and Emerging Growth
While the budget market faced significant pressure, the premium segment—phones priced above ₹45,000—showed greater resilience. Financing options and EMI schemes have become essential for maintaining sales in this segment, with over half of all mainline smartphone purchases now facilitated by financing. In the niche space, Nothing was a notable outlier, recording 105% year-on-year growth driven by its Phone (4a) series. Conversely, Apple saw a 3% decline in shipments, impacted by supply constraints during the quarter.
Investors may monitor whether memory prices stabilize in the coming months, as this will be a critical factor for manufacturers looking to restore margins or reduce retail prices. Future performance will likely depend on whether brands can manage supply chain costs and if financing availability continues to support sales in the premium and mid-range segments, especially as the industry faces forecasts of a 13% drop in shipments for the full year.