According to a study by Trakin Tech and Techarc, 54 per cent of prospective smartphone buyers in India could defer purchases or switch to refurbished devices as memory shortages, West Asia disruptions and rupee weakness push handset prices higher
More than half of India’s prospective smartphone buyers could postpone purchases or switch to refurbished devices during the festive season if handset prices continue to rise, potentially putting millions of sales at risk and dragging down annual smartphone shipments by as much as 30 per cent, according to a joint study by Trakin Tech and Techarc.
The study found that 54 per cent of consumers could alter their purchase plans if prices continue to increase. Of these, 48 per cent said they would defer purchases until prices stabilise, while a further 6 per cent indicated they would opt for refurbished or pre-owned smartphones instead.
Researchers estimate that if current pricing trends persist, annual smartphone shipments could fall to between 115 million and 120 million units, substantially below the 152 million units shipped in 2025.
“The message from Indian consumers is loud and clear,” said Arun of Trakin Tech. “India’s next growth cycle will not be won only by better specifications; it will be won by brands that make technology feel affordable again.”
The findings come at a time when India’s smartphone market is already showing signs of stress. Smartphone shipments declined 4.1 per cent year-on-year to 31 million units in the first quarter of 2026, according to IDC’s Worldwide Quarterly Mobile Phone Tracker. Counterpoint Research similarly reported a 3 per cent decline during the quarter, describing it as the market’s weakest quarterly performance in six years.
India’s smartphone market has struggled to regain momentum since its post-pandemic rebound. After reaching a record 169 million units in 2021, shipments fell sharply in 2022 before gradually recovering to 151 million units in 2024. The market ended 2025 at 152 million units, effectively flat, before slipping into another downturn in early 2026.
The survey suggests rising prices are emerging as a key concern for consumers ahead of the festive season, traditionally the industry’s most important sales period.
“We have started seeing cost pressures emerge. As soon as supply shortages begin, costs rise, and that is what has started happening. After the war, the impact has become much more pronounced. This was continuing before the war, but it was manageable,” said Vibha Mehra, Country Manager, Nokia India, in April, as previously reported by BW Businessworld.
Memory Crunch and Global Headwinds Drive Costs Higher
Industry analysts attribute the current wave of price increases to a combination of rising component costs, supply-chain disruptions and currency pressures.
“Escalating geopolitical tensions in the Middle East could amplify macroeconomic volatility, including higher energy prices, freight costs and foreign-exchange instability, further weakening consumer upgrades in price-sensitive markets. Demand was pressured by macroeconomic headwinds, including rupee depreciation and rising inflation, which weighed on affordability and delayed consumer upgrades,” said Omdia in its Q1 2026 India report.
A global shortage of memory chips, driven largely by demand from artificial intelligence infrastructure, has pushed up the cost of smartphone production worldwide. At the same time, the ongoing conflict in West Asia has disrupted shipping routes and increased freight and insurance costs, while the depreciation of the rupee against the US dollar has raised import costs for components.
“The Indian smartphone market is facing severe downside risk in 2026, with shipments forecast to decline by double digits. Price increases have accelerated into Q2 2026, with entry-level devices already seeing steep increases of 18-20 per cent as sustained memory inflation has forced a reset of price points,” the report added.
The rapid expansion of AI infrastructure has altered demand patterns across the semiconductor industry, with memory manufacturers increasingly prioritising high-margin AI products over components used in consumer electronics.
“Memory players are prioritising AI data centres over consumer electronics,” Counterpoint Senior Analyst Shilpi Jain previously told BW Businessworld.
Mobile DRAM prices have risen nearly 70 per cent since early 2025, according to Counterpoint Research, while NAND flash prices have almost doubled during the same period. Memory now accounts for more than 20 per cent of the cost of producing a mid-range smartphone, compared with around 10-15 per cent in previous years.
In budget smartphones, memory can account for as much as 40 per cent of production costs, making the entry-level segment particularly vulnerable to rising component prices, according to Counterpoint Research.
According to media reports, Samsung has cut memory production by roughly 50 per cent through 2024, while the industry invested little in new capacity, leaving suppliers poorly positioned when AI-related demand surged. New facilities being developed by Micron and SK Hynix are not expected to contribute significant output before 2027, while SK Hynix has already committed its entire 2026 RAM production.
TrendForce forecasts that smartphone bill-of-materials costs will rise by a further 5-7 per cent in 2026 compared with 2025.
Navkendar Singh of IDC said the reality on the ground was straightforward: “Smartphone makers are raising prices because component suppliers are catering to the high-demand AI memory chip market.”
Smartphone Brands Pass Higher Costs to Consumers
The impact is already visible across major smartphone brands operating in India. The Samsung Galaxy M36 5G, launched in June 2025 at Rs 17,499, is now priced at Rs 21,999, representing an increase of more than 20 per cent. The Vivo V70, launched in February 2026 at Rs 45,999, is now selling at Rs 49,999. The Nothing Phone 3a Lite, launched at Rs 20,999, is listed at Rs 21,999 on Flipkart.
From 1 May, OnePlus, Nothing, Xiaomi and Realme raised prices across multiple models, with increases ranging from Rs 1,000 to Rs 5,000. The OnePlus 15 now starts at Rs 77,999, a Rs 5,000 increase. Samsung’s Galaxy S26 series launched with price increases of up to Rs 10,000 compared with previous benchmarks, while several entry-level devices became Rs 2,000-3,000 more expensive. The Motorola G35 5G rose from Rs 9,999 in December 2025 to Rs 11,999 by April 2026.
Counterpoint estimates that most smartphone brands in India had increased prices across their portfolios by an average of Rs 1,500 by March 2026, with further hikes expected throughout the year.
Budget Segment Bears the Brunt
The pressure is being felt most acutely at the lower end of the market. Devices priced below USD 100 recorded a 59 per cent year-on-year decline in shipments during the first quarter of 2026, with their share of total smartphone shipments falling from 18 per cent to just 8 per cent, according to an IDC report.
Consumers in this category are increasingly being pushed into higher price brackets, not because of aspirational upgrades but because manufacturers are finding it difficult to profitably sustain ultra-low-cost devices.
The average smartphone selling price in India rose to a record USD 302, or roughly Rs 29,000, in Q1 2026, representing a 10.4 per cent increase from a year earlier.
IDC noted that, unlike previous periods, aggressive discounting and promotional campaigns remained limited as rising input costs constrained brands’ ability to stimulate demand through pricing incentives.
The industry’s long-standing strategy of bringing premium features to affordable devices is increasingly under pressure, forcing manufacturers to choose between raising prices, reducing specifications or accepting lower margins.
Refurbished Smartphones Emerge as a Key Alternative
The Trakin Tech-Techarc study estimates that the 6 per cent of consumers moving away from new devices could add between 6 million and 7 million units to India’s refurbished smartphone market this year.
“Financing is challenging, especially in lower tiers where it matters most. Potential buyers often lack a credit history because they work in the pseudo-organised sector, while banks remain reluctant to extend credit,” said Faisal Kawoosa.
India’s organised refurbished smartphone market ended 2025 with double-digit growth, with Cashify reporting a 40 per cent increase in revenue during the year.
According to Techarc’s Faisal Kawoosa, a market that typically records annual sales of 23-25 million units could grow to 30-32 million units in 2026.
Apple accounted for nearly 63 per cent of refurbished smartphone sales in the first half of 2025, followed by OnePlus at 10.2 per cent, Xiaomi at 9.7 per cent and Samsung at 6.1 per cent, according to a Cashify study. Meanwhile, a Redseer report projects that India’s refurbished smartphone market could reach USD 10 billion by 2026.
Kailash Lakhyani of the All India Mobile Retailers Association said there was “no near-term respite” and that further price increases remained likely because memory chip prices were not expected to ease before 2027.
IDC data shows India’s average smartphone replacement cycle has lengthened from around 24 months to nearly 36 months, driven by rising prices, improving device durability and tighter financing conditions.
The September-November festive season, which accounts for a significant share of annual smartphone sales, is expected to determine whether the market ends the year closer to industry forecasts or moves towards the more pessimistic scenario outlined in the Trakin Tech-Techarc study.
