Smartphone brands rethink India strategy as storage chip costs soar

India, touted as the world’s fastest-growing and second-largest smartphone market, is starting to show signs of strain.

While Oppo, Motorola, Nothing, and Xiaomi secured good growth, and Samsung registered flat growth, major brands such as Vivo, OnePlus, Realme, Poco, iQOO and Apple suffered a shipment decline in the first quarter (January-March) of 2026, reported International Data Corporation (IDC).

The report noted that shipments in the entry-level segment fell by a whopping 59 per cent YoY in Q1 2026, mainly due to supply crunch in storage chipsets.

“The memory chips being used in smartphones are now also being used across AI data centres, and with demand surging, it becomes a simple demand and supply game,” said Akis Evangelidis, Co-founder & India President, Nothing.

To put that into perspective, Evangelidis noted that in early 2025, for a single phone unit that retails at around Rs 40,000, the company used to spend around Rs 19,200 for components, testing, labour charge and manufacturing. And, in that, the company used to spend around Rs 2,000 on storage and RAM components. Now, the prices of the latter have shot up to Rs 11,500 (almost 500 per cent increase), leaving very little room to fit in the camera, battery and other components, meaning manufacturers are increasingly left with no choice but to increase prices.

Q1 2026: Smartphone Price band performance in India.

It can be noted that the phones launched in late-2025 and the first half of 2026 have around 14-15 per cent higher price than their predecessors. The same phone models, in the last few weeks, have received a price hike in the range of Rs 5,000-12,000.

Even if the customer plans to wait for a few months or till the festive season, in the hope that e-commerce firms will offer devices at a discount, they will not see any significant price drop.

“We are used to seeing smartphone prices gradually come down after launch, but that trend is most-likely not going to continue. Demand for memory chips is not slowing down anytime soon, and we foresee this sustaining until at least the second half of next year. That means even smartphones that have already been launched will see their prices increase over time,” said Evangelidis.

Some companies have taken up cost-cutting measures that include using outdated chipsets, cosmetic design changes with low build-quality, and a reduction in the number of camera sensors in the phone. In the sub-Rs 10,000 price range, smartphones have limitations on running popular GenAI applications and gaming titles. Consequently, consumers have no choice but to go for premium phones.

Unlike other firms, Apple has largely off-set component cost inflation by raising base storage capacities, instead of sharply increasing retail prices of devices.

“We expect the things (chipset supply crunch) to ease only in H2 of 2027, but we have rarely seen prices coming down, even if memory price pressures ease a bit. So, whether we like it or not, it’s the new norm,” said Mohammad Faisal Ali Kawoosa, Chief Analyst at consumer electronics market research firm Techarc.

Besides cost-cutting measures, companies are reducing the number of phone launches per annum.

Also, some brands including Samsung and Google, are now offering refurbished phones with lucrative discounts, a standard one-year warranty, long software updates and EMI plans.

More smartphone makers are expected to come up with similar plans soon.

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