Rising chipset prices crush budget smartphone segment in India, sees 59 per cent decline: IDC

For almost a year, there has been a huge supply crunch related to RAM, storage and mobile chipsets, as all major semiconductors such as Qualcomm, MediaTek, Broadcom and others are prioritising the silicon shipments to generative Artificial Intelligence service providers and allied industry partners to rapidly scale up their data centres worldwide.

With a steep increase in the prices of smartphones, there is a drastic drop in sales, particularly in the budget segment.

As per International Data Corporation (IDC), shipments in the entry-level segment fell by a whopping 59 per cent in the first quarter of 2026 Year-over-Year.

In the sub-Rs 10,000 price range, smartphones come with outdated chipsets and very little to offer, and have limitations on running popular gen AI applications and gaming titles. Expectedly, the budget segment share has collapsed from 18 per cent to just 8 per cent.

“Average selling prices increased 10.4 per cent YoY to a record US$302 in Q1 2026, driven by persistent memory cost inflation across both newly launched devices and existing models. Unlike previous quarters, aggressive discounting and channel-led promotional schemes remained limited, as rising input costs constrained brands’ ability to stimulate demand through pricing interventions. The current environment signals a broader structural shift in the market, where brands may increasingly need to rely on product differentiation, financing offers, and premiumization strategies rather than price-led promotions to drive demand through the remainder of 2026,” said Aditya Rampal, senior research analyst, Devices Research, IDC Asia Pacific.

IDC's Indian smartphone market ( Q1, 2026).

The mass-budget segment (Rs 10,000 –Rs 20,000) grew 10 per cent YoY, expanding its share from 39 per cent to 45 per cent, indicating consumers had no choice but to pay a premium for feature-rich smartphones.

In the entry-premium segment ( 20,000 to Rs 35,000), there was a three per cent increase in shipments. The mid-premium category (Rs 35,000 -- Rs 60,000) registered 29 per cent growth.

The premium segment (Rs 60,000 to 80,000) saw the biggest growth, a 32 per cent increase in shipments compared to the previous year's same period.

The super-premium phones (costing more than one lakh) too have shown a one per cent decline compared to the previous year. This has to do with very little innovation in such phones and having such incremental features.

Last year's leading phone maker Vivo suffered a four per cent decline in market share compared to the same period the previous year. Whereas the second-ranked Samsung maintained the same position with flat growth.

However, on the bright side, Oppo registered 22 per cent growth, the biggest among the top 10 brands. Apple registered a five per cent decline and now commands fourth position (with 9.4 per cent market share) on the leader board.

Motorola, after a really long time, returned to the top five with 14 per cent growth. It now holds 8.9 per cent of the market.

OnePlus suffered 32 per cent decline in shipments, while Xiaomi registered a modest growth of three per cent.

Others iQOO, Realme, and Poco saw the market share shrink by 23 per cent, 20 per cent and 14 per cent, respectively.

Market analysts have predicted there is possibility of further decline in smartphone demand for the rest of the year.

Some brands, including Google, Motorola and others, have begun offering refurbished smartphones in India.

More companies are expected to come up with similar refurbished mobile handset sale initiatives, as there is no sign of prices of RAM and storage chipsets coming down anytime soon.

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