The Indian smartphone market is entering into one of its most challenging phases in recent years, with shipments projected to decline 10-13 per cent in calendar year (CY) 2026 — marking the steepest contraction since 2022, due to sustained component cost inflation, led by a sharp surge in memory prices, industry veterans have said.
The shortage is materially impacting affordability and extending replacement cycles, they said, adding that the price escalation is expected to continue for the next one year and hit low-end mobile phones the most. Experts said the government can also do nothing about it because import duty is already zero for such items and they cannot force any global company to supply more into the country.
“Driven by strong artificial intelligence (AI) demand and superior margins, memory manufacturers are increasingly allocating capacity toward high-bandwidth memory (HBM), tightening supply for conventional dynamic random access memory (DRAM) and NAND (memory chips that retain data without power)... We are already seeing this reflect in pricing trends — DRAM prices have firmed up sharply and are expected to remain elevated, while HBM continues to command a significant premium due to constrained supply,” Ashok Chandak, President, India Electronics and Semiconductor Association (IESA), told businsessline.
Capacity tightness
In the near term, capacity tightness is likely to persist through 2026, particularly in advanced nodes and packaging, with gradual easing expected only as new investments come online over the next two-three years, he said.
“As a result, the memory market is clearly bifurcating — HBM is seeing premium, AI-led demand, while conventional memory is becoming tighter and more expensive. This is beginning to impact entry-level consumer devices, where OEMs are recalibrating configurations and pricing. Importantly, this is leading to production optimisation rather than production cuts. OEMs and EMS players are actively adjusting product mix, sourcing strategies and cost structures, with no widespread reduction in manufacturing,” Chandak added.
Similarly, Pankaj Mohindroo, Chairman, India Cellular & Electronics Association (ICEA) said that the global memory industry is undergoing a structural reconfiguration, with production capacity increasingly gravitating towards AI and data centre applications.
Near-term volumes
“For the Indian mobile phone market, this is likely to weigh on near-term volumes, particularly in the entry and mid-tier segments, as the cost impact moves through the supply chain. That said, as supply dynamics normalise and manufacturing efficiencies improve, we remain confident in the sector’s resilience and long-term growth trajectory,” Mohindroo told businessline.
According to CyberMedia Research (CMR), with memory now accounting for 20–25 per cent of the bill of materials (BoM), average smartphone prices are expected to rise by around 25 per cent, placing disproportionate pressure on entry-level and value-for-money segments.
“These segments are bearing the brunt of the slowdown, as brands increasingly pivot toward premium-led growth and tighter portfolio execution to protect margins. At the same time, this environment creates a strategic opening for players with strong supply chain capabilities and agile cost management to compete effectively in the value segment,” Prabhu Ram, Vice-President — Industry Research Group, CMR, said.
Queries sent by businessline to Samsung India, Xiaomi, Oppo and Vivo for comments, did not elicit any response till the time of going to press.
Published on April 30, 2026