tech
AI-driven memory crunch jolts India's smartphone market
India's smartphone slowdown highlights how the AI boom is reshaping consumer electronics, from pricing and demand to corporate strategy.
TL;DR
- Rising demand for AI data centers is increasing the cost of memory chips (RAM and storage), which are also essential for smartphones.
- Manufacturers are prioritizing profitable AI chips, reducing capacity for consumer electronics and driving up their prices.
- India, with a large segment of budget-conscious consumers, has seen a 10% year-over-year decline in smartphone shipments in Q2, the steepest June-quarter drop in six years.
- The sub-₹15,000 segment in India experienced a 45% drop in shipments, heavily impacting Chinese brands concentrated in this market.
- Consumers are expected to delay smartphone upgrades, extending replacement cycles, while premium brands are more insulated.
- Some brands, like OnePlus, are shifting focus to profitable markets like India and withdrawing from Europe and North America.
- The Indian smartphone market is moving from volume-led growth to value growth, with fewer phones sold but higher revenue per device.
- Smartphone prices in India have increased by 4% to 68%, pushing consumers towards higher-priced devices, delayed upgrades, or the secondhand market.
- Financing is becoming crucial for affordability, and brands are building inventory to mitigate future cost increases.
- Memory shortages and elevated smartphone prices are predicted to persist until at least the end of 2027, with price increases moderating over time.