AI’s memory appetite is squeezing India’s smartphone market

Introduction

The AI boom is no longer just a story about cloud platforms, GPUs, and data centers. It is beginning to reshape the economics of everyday devices. According to TechCrunch, India’s smartphone market is now one of the clearest examples of how surging demand for AI-related memory is spilling over into consumer electronics.

The key pressure point is memory: the RAM and storage components used in phones compete, at the manufacturing level, with more profitable high-bandwidth memory used in AI accelerators. As Samsung, SK Hynix, Micron, and others prioritize HBM capacity, standard memory supply for phones and laptops has become tighter and more expensive.

Key points

• Shipments are falling sharply in India. Counterpoint Research says smartphone shipments in India dropped 10% year over year in the April-June quarter, the steepest June-quarter decline in six years. China, by comparison, was down only 2% in the same period.
• The low end is taking the biggest hit. Around 60% of India’s smartphone market sits below ₹20,000, where even modest component cost increases can meaningfully affect retail prices. The sub-₹15,000 segment fell 45% from a year earlier.
• AI is changing memory economics. High-bandwidth memory commands better returns per wafer than conventional phone memory, giving suppliers a strong incentive to shift capacity toward AI infrastructure.
• Consumers are delaying upgrades. Analysts expect many Indian buyers to stretch replacement cycles from about 3.5 years to roughly four years, while others turn to financing, higher-priced devices, or the secondhand market.
• Brand performance is diverging. Samsung was the only major brand to post shipment growth in India in the quarter. Apple’s decline was linked largely to supply constraints, while Chinese brands with heavier exposure to entry and mid-tier devices lost share.

Why it matters

India matters because it is the world’s second-largest smartphone market by shipments and a key test case for price-sensitive demand. If AI-driven component inflation can meaningfully reduce volumes there, other emerging markets may face similar pressure.

The impact is also strategic. Budget-oriented brands that once relied on scale and thin margins may have to rethink sub-brands, regional footprints, and product launches. OnePlus’ decision to stop launching new products in Europe and North America while maintaining its India business points to a broader pattern: vendors are retreating to markets where the profit equation still works.

For consumers, the issue is straightforward: phones cost more, financing becomes more important, and upgrade cycles lengthen. IDC expects memory shortages and elevated smartphone prices to persist at least until the end of 2027, though the pace of price increases may slow as higher prices become normalized.

The larger lesson is that AI infrastructure is no longer isolated from consumer hardware. The same supply chains feeding data center expansion are now affecting the price and availability of mass-market smartphones.

Source: TechCrunch AI