The persistent memory component shortage, primarily driven by surging demand from AI data centres, continues to exert significant pressure on India's smartphone market into 2026. Global suppliers have redirected capacity towards high-bandwidth memory for AI infrastructure, leading to constrained supplies and elevated prices for conventional DRAM and NAND used in consumer devices. This imbalance, expected to last at least until mid-2026 or beyond, is forcing manufacturers to confront higher bill-of-materials costs, particularly in price-sensitive segments dominant in India.
Here are a few predictions made by industry experts on the Indian smartphone market for the year 2026.
1. Smartphone prices will increase
Prachir Singh, Senior Research Analyst at Counterpoint Research, highlights the direct link, "Rising memory costs, driven by accelerating AI demand, are a key factor behind recent smartphone price hike. The global smartphone BOM (bill of materials) is expected to rise by up to 15 percent, with low- and mid-segment devices in India facing the highest impact. If memory prices remain elevated, BOM costs for some models could increase by 10–20 percent, making price corrections unavoidable, something already visible across several brands."
Recent analyses indicate that memory prices have already surged substantially, with further increases projected for the first half of 2026. In India, this translates to heightened challenges for affordable and mid-range devices, where margins are thinner, potentially leading to price hikes or specification adjustments to maintain viability.
2. Smartphone shipment volumes to decline
Faisal Kawoosa, Chief Analyst and Co-Founder at Techarc, provides a grounded outlook, "A realistic view for 2026 is that the market will have appetite to absorb 30-35 million units a quarter, which settles the total volumes for the year in the range of 120-140 million. Of course there could be festive quarter where they can go even to 38-40 million units. Our understanding is that in 2025, the smartphone industry cumulatively over-shipped by 10-15 percent beyond the actual potential of the market."
This projection aligns with broader pressures from the memory shortage, compounded by slowdowns in new subscriber growth and cautious consumer spending. As a result, shipment volumes are likely to remain under pressure in 2026, particularly in price-sensitive segments, with Counterpoint noting ongoing stress in the Indian market extending into the year.
3. Smartphone manufacturers will face procurement hurdles and supply chain recalibration
Kawoosa further emphasises the need for strategic shifts, "In 2026, smartphone brands will have to recalibrate their demand-supply equation to meet the market realities. While from supply side, they will be seen busy managing component procurement challenges and finding ways of absorbing price fluctuations, on the demand side, they will have to set realistic forecast factoring things like exhaustion of potential consumers buying premium phones, slowdown in new subscriber addition and likely new price thresholds of entry level smartphones which will make it further inaccessible from many users. Also, the tightening of financing options as we have seen several cases being reported where customers have defaulted honouring the full tenure of EMIs. That is also cautioning the entire financing ecosystem to make stringent guidelines though the government has allowed blocking such phones in case of non-payment of EMIs."
These dynamics are intensified by the AI-driven diversion of memory production, limiting options for Indian manufacturers and distributors reliant on global supply chains.
4. Evolving smartphone marketing strategies and segment divergence
Singh observes a pivot in approach, "Marketing strategies are also shifting toward durability, bigger battery, and portrait led camera performance rather than aggressive price-led positioning. While the mass market remains highly price-sensitive, premium buyers are increasingly focused on long-term value, giving brands like Apple greater pricing flexibility, while most Android OEMs face tighter margins and difficult trade-offs."
In India, the premium segment shows relative resilience, supported by financing schemes and upgrade demand, while mass-market volumes face contraction due to affordability barriers exacerbated by component costs. The mid-range (Rs. 10,000-Rs. 20,000) market, India's traditional growth engine, faces pressure, with some brands potentially reducing SKUs or focusing more on premium offerings.
The memory shortage's effects are expected to vary by segment, with low- and mid-tier devices in India most affected as BOM costs rise disproportionately. Premium offerings may absorb impacts better through higher margins. Overall, the crisis highlights a broader reallocation of semiconductor resources towards AI, potentially delaying recovery in consumer electronics until new capacity comes online later in the decade. Festive periods may provide temporary lifts, but sustained growth will depend on supply normalisation and adaptive strategies from brands operating in India's diverse market.
