India smartphone shipments fall 11.1 percent as memory shortage pushes prices to record high

The memory chip shortage is squeezing entry-level devices, pushing consumers towards higher price bands and putting greater pressure on volume-driven brands.

India’s smartphone shipments fell 11.1 percent year over year to 33.2 million units in Q2 2026 as the global memory chip shortage pushed component costs higher and reduced affordability across price bands.

According to IDC’s Worldwide Quarterly Mobile Phone Tracker, average selling prices rose 14.4 percent year over year to a record USD 315 during the quarter, even as overall shipments declined.

The combination of falling volumes and rising prices is changing the economics of India’s smartphone market, with the impact being felt most sharply at the lower end.

Shipments in the sub-USD 100 segment fell 74.3 percent year over year in Q2, reducing its share of the market from 15.6 percent to 4.5 percent.

The pressure is making it difficult for brands to maintain profitability in the entry-level segment. IDC said brands are responding with fewer model launches and thinner channel support.

At the same time, consumers priced out of the entry-level segment are moving towards more expensive devices.

The USD 400–600 segment grew 60.3 percent year over year, with its market share increasing from 4.8 percent to 8.6 percent.

The USD 100–200 segment, which remains the largest part of the market with a 46.8 percent share, recorded flat shipments and is becoming the main value segment for cost-conscious buyers.

The shift indicates that higher component costs are not simply reducing smartphone demand but are also changing where consumers are buying within the market.

Channel mix shifts as online discounts weaken

The change in pricing is also affecting how smartphones move through the channel. Online smartphone shipments fell 19.8 percent year over year in Q2, with the online channel’s share declining from 46.4 percent to 41.9 percent.

Offline shipments declined by only 3.6 percent, increasing the channel’s share from 53.6 percent to 58.1 percent.

IDC attributed the online decline partly to the reduction in e-tailer-led discounts and offers compared with a year earlier.

The impact has been particularly visible as entry-level smartphones have become a smaller part of the online mix, while flagship devices have also seen less upfront discounting.

Brands are instead leaning heavily on physical stores to manage pricing pressure.

For distributors and retailers, the shift points to a market where maintaining volumes through aggressive discounting is becoming harder. With component costs rising and margins under pressure, financing and EMI schemes are expected to become important in helping customers manage higher device prices.

IDC senior research analyst Aditya Rampal said the increase in average selling prices marks a reversal from the same period last year, when early festive discounts and offers were used to build momentum ahead of the season.

This year, both brands and channels have reduced their reliance on that approach as thinner margins leave less room to use price as a demand lever.

“Heading into the festive season, financing options will be key to keeping affordability within reach, alongside product differentiation in the mid-premium segment, to sustain consumer demand,” Rampal said.

The shift in the channel mix is also taking place as brands reassess their portfolios. Entry-level 5G devices have become more expensive, prompting some brands to reintroduce or extend 4G models to maintain their presence in the lower end of the market.

4G’s share increased to 11.1 percent in Q2.

IDC considers this a temporary supply-led measure. Once existing 4G inventory runs out, consumers could face a choice between moving to more expensive 5G devices or delaying purchases.

Pressure builds on volume-driven brands

The market contraction is not affecting all brands equally. Apple and Samsung shipments remained largely flat in Q2, allowing both companies to maintain their position as the overall market declined.

IDC said Samsung’s diversified portfolio and scale have helped it absorb higher costs without sacrificing volume or margins.

Apple has also maintained demand despite supply shortages affecting the iPhone 15, 16 and 17. The company’s shipments remained largely flat during the quarter.

Chinese brands are facing greater pressure because of their stronger exposure to the low-end and mass-budget segments.

Several leading Chinese manufacturers recorded sharper double-digit declines as the cost environment made their traditional budget positioning harder to sustain.

These brands are cutting costs and shifting portfolios towards higher-margin models, but the transition creates another challenge: consumers accustomed to budget pricing may be less willing to accept significantly higher prices.

IDC said demand has tilted towards brands with greater scale and supply chain stability.

The market therefore points to a widening divide between brands with the scale and portfolio mix to absorb higher component costs and those that depend more heavily on entry-level volumes.

H2 expected to be tougher

The pressure is expected to increase in the second half of 2026 as brands run out of lower-cost inventory that helped cushion the impact of higher memory prices during the first half.

IDC expects smartphone shipments to decline by more than 15 percent in H2, taking full-year volumes to approximately 128–130 million units.

The festive season is likely to be an important test for vendors and the channel, particularly as brands have less room to rely on discounts to drive demand.

IDC said the market could benefit from early signs of memory price stabilisation, wider financing and EMI availability and stronger-than-expected festive demand in the mid-premium segment.

However, a memory shortage that continues into 2027, further macroeconomic pressure or consumers choosing to defer purchases could worsen the decline.

IDC senior research manager Upasana Joshi said demand has not disappeared, but consumers are taking longer to make purchases as prices rise.

“People are simply waiting longer to buy,” Joshi said, adding that those planning an upgrade may choose to buy sooner as prices could rise further.

For the channel, the next phase will therefore depend less on discount-led volume growth and more on how vendors, distributors and retailers manage higher prices, financing and the shift towards higher-value devices.

The key indicators will be whether offline channels can continue to offset the decline in online volumes, whether financing can maintain affordability and whether the USD 400–600 segment can sustain its growth after the festive season.