India's smartphone shipments dropped 10% in the June quarter due to a sharp rise in memory chip prices, which pushed average device costs up by 15%. This has severely impacted the budget segment, while premium handsets remain stable. Analysts now expect the market to shrink by 13% for the full year as component prices remain elevated.
The Indian smartphone market recorded its sharpest June-quarter decline in six years, with total shipments falling 10% compared to the same period last year. This downturn is largely linked to the surging cost of memory components, which have nearly quadrupled since September 2025. The resulting pressure on manufacturing costs has forced companies to pass on expenses to consumers, leading to a 15% increase in the average price of smartphones by the end of June.
Impact on Mass-Market Demand
The most significant pressure is visible in the budget segment, specifically devices priced under ₹15,000. Shipments in this category plunged by 45% during the quarter as cost-conscious buyers delayed purchases or opted for older, more affordable models. This decline has disproportionately affected Chinese smartphone brands, which rely heavily on volume in the mass-market category. To address this demand gap, some manufacturers are now refocusing on 4G handsets to provide cheaper alternatives while waiting for the cost of memory chips to stabilize.
Divergence in Premium Segment
While the budget category is struggling, the ultra-premium segment—devices priced above ₹45,000—has remained stable. Sales in this tier continue to be supported by the widespread availability of consumer financing options, including card EMIs and loans from non-banking financial companies (NBFCs). These financing solutions now account for over 50% of smartphone sales in mainline retail stores, allowing high-end buyers to avoid the full impact of price hikes.
Brand Performance and Market Shifts
Market data indicates varying performances among key players. Apple reported a 3% decline in shipments, maintaining a 7% market share. In the premium space, Google recorded a 68% annual growth rate, supported by expanded offline distribution and aggressive marketing. Additionally, Nothing was identified as the fastest-growing brand in terms of volume, with a 105% year-on-year increase. In the chipset category, MediaTek continues to lead the domestic market with a 49% shipment share.
Investors may monitor how component pricing trends evolve over the next two quarters. The sustainability of the premium segment and the ability of mass-market brands to recover shipments will be key factors for the sector's performance in the second half of the year. If memory chip costs do not retreat, the projected 13% contraction for the full year could place further pressure on the operating margins of companies with high exposure to the budget smartphone category.