AI-driven memory crunch jolts India’s smartphone market

In other words, OnePlus is retreating to markets where it can still turn a profit and ceding ground elsewhere — a pattern likely to repeat across other budget-focused brands as margins tighten.

Indeed, Pathak told TechCrunch that running several sub-brands only makes sense if each one sells enough volume to cover shared costs, and that math stops working once margins get this thin. “Sub-brands normally have overlaps and shared resources, and you need a minimum base to justify the cut-throat margins. Profitability is the key to deciding market operations,” he said.

That pressure on brands is trickling straight down to the people buying their phones. Kiranjeet Kaur, associate research director for mobile phones research at IDC, said the Indian smartphone market is shifting from volume-led growth to value growth — meaning fewer phones are being sold overall, but each one generates more revenue — as higher component costs make lower-priced smartphones increasingly uneconomical.

The higher component costs are already filtering through to consumers. Smartphone prices in India have risen by between 4% and 68%, depending on the model, Pathak said, and as prices rise, consumers are either moving to higher-priced devices, delaying upgrades, or turning to the secondhand market.

Financing has meanwhile become “central to affordability,” Kaur told TechCrunch. She added that brands and retailers were also building inventory ahead of the festive season to lock in lower costs before further increases in component prices.

IDC also expects India’s smartphone shipments to decline by double digits in Q2, a steeper fall than the 4.1% decline in the first quarter and the 5.3% drop in the previous quarter, Kaur said. However, she noted the firm’s estimates were not yet finalized.

Kaur told TechCrunch that memory shortages and elevated smartphone prices were likely to persist until at least the end of 2027, although the pace of price increases should moderate as consumers gradually adjust to higher prices becoming the new normal.

“For Indian consumers, it is a double whammy as the weaker currency makes imports costlier, which has added to margin pressures for the market players, and they are passing on the cost to the consumer,” Kaur said.