India's smartphone market is experiencing a sharp downturn as a global shortage of memory chips, driven by surging AI data centre demand, pushes up handset prices. Manufacturers such as Samsung, SK Hynix and Micron have redirected production towards high-bandwidth memory used in AI accelerators, which is far more profitable than the standard RAM and storage used in phones, squeezing supply and raising costs for consumer devices. This has made India, as the world's second-largest smartphone market, a key indicator of how the AI-driven chip crunch is spreading into everyday electronics.

Smartphone shipments in India fell 10% year-on-year in the April-June quarter, the steepest June-quarter decline in six years, according to Counterpoint Research, with the effect far more severe than in China's 2% drop, since roughly 60% of India's market sits in the sub-₹20,000 (under $210) price band most exposed to memory cost rises. Shipments in the sub-₹15,000 (under $150) segment collapsed by 45%, hitting Chinese budget brands hardest and pushing their combined market share to its lowest point since 2020, while Samsung was the only major brand to grow (up 2%) and Apple's 3% decline stemmed mainly from supply constraints. Consumers are expected to hold onto phones for around four years instead of 3.5, and OnePlus has already responded by withdrawing new launches from Europe and North America to focus on China and India, where it can remain profitable.