India's smartphone shipments fell 26% year on year to 35.6 million units in July-September 2026, the steepest decline since 2016, according to Omdia, as rising memory chip prices forced repeated handset price increases. Samsung overtook Vivo for the top spot, and full-year shipments are forecast to fall to 132-133 million.
<p>India's smartphone market, long one of the world's fastest-growing, has suffered its sharpest downturn in a decade. Shipments fell 26% year on year to 35.6 million units in the July-to-September quarter of 2026, the steepest decline since 2016, according to research firm Omdia, as reported by Business Standard on October 19.</p><p>The main culprit is the rising cost of memory chips. Prices of DRAM and storage chips have surged as artificial intelligence data centres absorb an ever-larger share of global supply, and handset makers have repeatedly passed those costs on to consumers. In a price-sensitive market where most phones sell for modest sums, higher prices have driven many buyers to delay upgrades.</p><p>The slump spans almost the entire market, from premium iPhones to entry-level Android devices, and it comes at the start of the festive season, traditionally the busiest period of the year for phone sales.</p><h2>Samsung takes the top spot as Vivo slides</h2><p>The downturn reshuffled the brand rankings. Samsung shipped 6.7 million units, down just 1% from 6.8 million a year earlier, and its market share rose to 19% from 14%, lifting it to the top position.</p><p>Vivo, which led the market a year ago with a 20% share, saw shipments fall 34% to 6.4 million units, giving it an 18% share and second place. Oppo, in third place, recorded a 24% drop, while Xiaomi, in fourth, fell 28%.</p><p>Apple's shipments declined 20% to 3.9 million units from 4.9 million. The iPhone 18 Pro and Pro Max went on sale on September 18, but sales of the older iPhone 16 and iPhone 17 were weaker than expected, Omdia said. All other brands combined fell 34% to 9.2 million units.</p><p>The combined market share of Chinese manufacturers fell to 68% from 75%. Omdia said the weaker September online sales period, with fewer exclusive launches, fewer affordable models and smaller promotional discounts, disproportionately hit Chinese brands, which have traditionally relied heavily on online channels and aggressive pricing.</p><h2>The memory squeeze</h2><p>The memory price surge is a direct consequence of the AI boom. Servers used to train and run AI models require vast quantities of high-bandwidth memory and conventional DRAM, and the world's three dominant memory producers, Samsung, SK hynix and Micron, have shifted production capacity towards these high-margin products. That has tightened supply for consumer devices such as phones and laptops.</p><p>For smartphone makers, memory is one of the largest components of the bill of materials, particularly in mid-range and premium phones with large storage. When memory prices rise sharply, manufacturers must either absorb the cost, cutting into thin margins, or raise prices. In 2026, most have done the latter, and in some cases more than once.</p><p>Omdia expects pricing pressure to persist at least through the first half of 2027. "September, historically a critical inventory build-up period for major online sales events, saw weaker shipment movements," said Sanyam Chaurasia, principal analyst at Omdia.</p><h2>A longer wait between upgrades</h2><p>The research firm has cut its forecast for the year. It now expects India's smartphone shipments in 2026 to total 132 million to 133 million units, down from 153 million in 2025. Shipments are expected to fall a further low single-digit percentage in 2027, and could struggle to reach 120 million.</p><p>One of the most important trends is that consumers are holding on to their phones for longer. Omdia projects that the average replacement cycle will lengthen from 3.5 years in 2025 to 3.8 years in 2026 and 4.3 years in 2027. Longer replacement cycles reduce the number of phones sold each year, even if the total number of smartphone users continues to grow.</p><p>There is one potential bright spot. Survey research cited in the report found that four in ten respondents would be willing to pay more for useful AI capabilities on their phones. If manufacturers can deliver compelling AI features, such as on-device assistants, translation and photography tools, that could encourage some consumers to upgrade despite higher prices.</p><img src="/api/files/1792495038925-f0b78ab27b7b5bfa738e8459.webp" alt="b1691354-a1bc-4828-95ee-1529a9ba3572.png"><h2>Implications for Make in India</h2><p>The downturn has implications beyond the retail market. India has become one of the world's largest smartphone manufacturing hubs, thanks to the government's production-linked incentive scheme, which has attracted investment from Apple's contract manufacturers, Samsung and domestic electronics firms. A large share of iPhones sold globally are now assembled in India, and smartphones have become one of the country's largest export categories.</p><p>While exports are driven by global demand, a weaker domestic market reduces volumes for factories and suppliers focused on Indian consumers, particularly those making entry-level and mid-range devices for Chinese and Indian brands. Component makers and distributors could feel the impact in the coming quarters.</p><p>The decline also matters for India's digital economy. Affordable smartphones have been the gateway to the internet for hundreds of millions of Indians, enabling digital payments, e-commerce, online education and access to government services. If prices continue to rise, the pace at which new users come online, particularly in rural areas, could slow.</p><h2>What the industry is doing</h2><p>Manufacturers are responding in several ways. Some are trimming specifications, such as storage capacity, to keep prices within key thresholds. Others are offering financing schemes, exchange offers and bundled services to soften the impact of higher prices. Retail expansion in smaller towns, where offline stores remain important, is another focus.</p><p>The festive season, which runs from Dussehra to Diwali, will be a key test. Brands and retailers typically offer their biggest discounts during this period, and strong sales could partly offset the weakness of the third quarter. But with memory costs still elevated, deep discounts will be harder to sustain.</p><h2>Price thresholds matter</h2><p>In India, smartphone demand is heavily concentrated in price bands below ₹20,000, and even small increases can push a model out of a buyer's budget. Brands design their portfolios around key thresholds such as ₹10,000, ₹15,000 and ₹20,000. When component costs rise, manufacturers face a stark choice between breaching those thresholds and cutting specifications that consumers notice, such as storage, camera quality or battery capacity.</p><h2>The outlook</h2><p>For now, India's smartphone market is caught in a squeeze created thousands of miles away, in the data centres powering the global AI boom. Until memory prices ease, which Omdia does not expect before mid-2027, handset makers face a difficult choice between protecting margins and protecting volumes.</p><p>For consumers, the message is that phones will remain more expensive for some time. For the industry, the challenge is to convince buyers that new devices are worth the higher price, whether through AI features, better cameras or longer-lasting hardware. For India's broader digital ambitions, the slowdown is a reminder that affordable access to technology cannot be taken for granted.</p>
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