Smartphone Shipments Hit Six-Year Low in India: Counterpoint Report

India’s smartphone market has entered a challenging phase, with shipments declining in the first quarter of calendar year 2026 due to rising component costs and weakening consumer demand.

According to Counterpoint Research, the market recorded a 3 per cent year-on-year decline in Q1 CY2026, marking the weakest quarterly performance in the past six years. The slowdown highlights the growing pressure on both manufacturers and consumers as global supply constraints and macroeconomic factors reshape the industry landscape.

Decline in Shipments and Market Performance

Weakest Quarter in Six Years

India’s smartphone shipments fell by 3 per cent year-on-year in Q1 CY2026, reflecting a significant slowdown in demand. This follows a mixed performance over recent quarters, indicating volatility in the market.

In Q4 CY2025, shipments had already declined by 4 per cent year-on-year, largely due to a post-festive slowdown and price increases linked to rising memory costs.

However, the market had previously shown resilience, growing 5 per cent year-on-year by volume and 18 per cent by value in Q3 CY2025, driven by festive demand and strong traction in premium devices.

Increased Launch Activity Fails to Offset Decline

Despite the slowdown, smartphone brands attempted to maintain momentum by advancing nearly one-third of their product launches to Q1 2026. This strategy was aimed at countering rising bill of materials (BOM) costs caused by memory price inflation and currency fluctuations.

However, these efforts were not enough to prevent the overall decline in shipments.

Brand Performance in a Slowing Market

Market Leaders and Key Trends

Among leading brands, Vivo (excluding iQOO) retained the top position with a 21 per cent market share. Samsung followed in second place, supported by demand for its A-series models and the Galaxy S26 lineup.

OPPO secured the third position with a 14 per cent share and recorded 8 per cent year-on-year growth, making it the fastest-growing brand among the top five.

Xiaomi (including POCO) ranked fourth, driven by strong performance in the Rs 10,000–Rs 20,000 segment. Meanwhile, Realme continued to perform well in the same price band, particularly through online channels.

Premium Segment Gains Traction

Apple Inc. saw its shipment share reach 9 per cent in Q1 2026, supported by demand for the iPhone 17 series and financing options such as long-term EMIs and exchange offers.

Emerging brands also showed strong growth, with Nothing (including CMF) growing 47 per cent year-on-year, while Google recorded 39 per cent growth in the premium segment (above Rs 45,000).

Reasons Behind the Market Slowdown

Rising Memory Costs and Affordability Issues

The primary factor behind the decline is the sharp rise in component costs, particularly memory.

Counterpoint Senior Analyst Prachir Singh stated, “The market is facing a clear affordability squeeze, driven by sharp memory-led cost inflation and currency pressures that have forced OEMs to raise prices across key models.”

He further added, “with average hikes exceeding Rs 1,500, the sub-Rs 15,000 segment has been hit the hardest, given its high price sensitivity.”

Macroeconomic Pressures on Consumers

Beyond component costs, broader economic factors are also affecting demand. Singh noted that “rising energy costs amid ongoing geopolitical tensions in the Middle East are further straining household budgets, pushing consumers to prioritise essentials over discretionary purchases like smartphones.”

As a result, consumers are delaying upgrades, particularly in the mass-market segment, leading to extended replacement cycles.

Global Memory Shortage Driving Costs

Supply Constraints in DRAM and NAND

At the heart of rising costs is a global shortage of memory chips, including DRAM and NAND, which are essential for smartphones. Major manufacturers such as Samsung Electronics, SK Hynix, and Micron Technology dominate the market, collectively accounting for around 90 per cent of global DRAM production.

Shift Toward AI-Focused Memory

A key reason for the shortage is the industry’s shift toward high-bandwidth memory (HBM), which is increasingly used in AI infrastructure and offers higher profit margins. This shift has reduced the availability of standard memory used in smartphones and PCs.

According to a Nikkei Asia report, “a shortage of memory chips appears likely to continue until around 2027,” with production increases expected to meet only about 60 per cent of demand.

Rising Costs and Production Delays

Memory prices in early 2026 are estimated to be “up roughly 90 per cent on the quarter,” significantly increasing manufacturing costs. Memory now accounts for up to 20 per cent of the cost of low-end smartphones, a figure that could rise to nearly 40 per cent by mid-2026.

Although companies are expanding production capacity, most new facilities are not expected to contribute significantly until 2027 or later, prolonging the supply-demand imbalance.

Outlook: When Will the Market Recover?

Continued Pressure in the Near Term

The outlook for India’s smartphone market remains cautious. Counterpoint Research Director Tarun Pathak stated, “India’s smartphone market is expected to remain under pressure in the near term, with Q2 2026 likely to see a double-digit decline.”

For the full year, the market is projected to decline by around 10 per cent year-on-year, reflecting ongoing affordability challenges.

Long-Term Recovery Timeline

A sustained recovery will depend on easing memory supply constraints. However, industry estimates suggest that supply-demand balance may not stabilise until 2028, as new production capacity gradually comes online and AI-driven demand continues to absorb supply.

Strategic Shift by Brands

In response to these challenges, smartphone brands are expected to:

• Focus more on premium segments
• Optimise product portfolios
• Improve channel efficiency

Meanwhile, the mass market is likely to experience slower and uneven recovery.

Conclusion

India’s smartphone market is facing a period of adjustment, driven by rising memory costs, global supply constraints, and weakening consumer demand. While premium segments continue to show resilience, the broader market is under pressure, particularly in price-sensitive categories. With memory shortages expected to persist and macroeconomic challenges ongoing, a full recovery may take several years. Until then, both manufacturers and consumers will need to adapt to a more constrained and evolving market environment.