Chip Shortage Impacts Chinese Smartphones in India, Boosting Apple and Samsung

The escalating cost of memory chips is creating a diverging impact on the performance of budget Chinese smartphone brands and mid-range to premium American and South Korean manufacturers in India, the world's second-largest smartphone market by volume.

Industry experts indicate that the era of smartphones priced under $150 is coming to an end. Once current inventories are depleted, new models in this category will inevitably see higher prices to compensate for the increased memory component costs.

According to Neil Shah, co-founder at Counterpoint Research, new Chinese phone models in India could now range from $200 to $250, a significant jump from previous prices under $150. Market intelligence from Counterpoint Research shows that brands in the sub-$150 segment have already increased their smartphone prices by as much as 40%.

While Chinese smartphone companies have historically dominated the budget segment with feature-rich products, the rising cost of memory chips makes it increasingly challenging for them to maintain affordability. This price hike diminishes the perceived value for money of Chinese smartphones among Indian consumers. Simultaneously, it enhances the attractiveness of mid-price and premium handset brands like Samsung and Apple, as Shah explains.

Data from market intelligence firm IDC reveals that smartphone shipments in India during the first half of 2026 dropped to 64.2 million units, with a particularly steep decline in the entry-level tier. Although sales volume decreased by 7.9% year-on-year, the total value of sales grew by 3.6%, pushing the average selling price to a record $315.

IDC's report highlights that sales of Chinese smartphone companies saw a sharp fall as they struggled to justify higher price tags to price-sensitive buyers. In contrast, the iPhone 17 continued to be the top-shipped device for the first two quarters of 2026. In the June quarter alone, shipments for Vivo fell by 13.9%, Oppo by 8.5%, Xiaomi by 10%, and Realme by 14.2% compared to the previous year, according to IDC. Among major Chinese brands, OnePlus, which targets the higher-end market, reported the smallest year-on-year decline of 2.5%.

Upasana Joshi, senior research manager for devices research at IDC Asia Pacific, commented that the global memory chip shortage has driven up prices and "hit entry-level demand hardest, the segment Chinese brands rely on most." She added that while Chinese brands experienced significant declines, Samsung and Apple were the only major players that "held steady and gained share," with their shipments rising by 0.4% and 0.7% respectively in the June quarter, according to IDC.

The Chip Shortage's Impact

In the quarter ending June, the gap between India's leading smartphone seller, Vivo, and the second player, Samsung, narrowed. Samsung's market share increased by nearly 200 basis points, while Apple's share rose by 100 basis points during the June quarter. Vivo's market share, however, fell by 60 basis points according to IDC, and by 140 basis points based on Counterpoint Research estimates.

Samsung, which offers a broad portfolio of smartphones in India ranging from $200 to over $800, has been competing directly with Vivo in the $200-$300 price segment. Experts note that while Samsung benefits from in-house memory chip supply, many Chinese firms, including Vivo, have relied on chips from MediaTek, SK Hynix, and Samsung. Shah of Counterpoint Research explained that when memory chip prices began to rise last year, many Chinese smartphone companies switched to chips from UNISOC and CXMT. This strategy helped them maintain market share for a period but proved unsustainable.

He further mentioned that CXMT recently secured funding to expand its capacity to serve the AI and data center market in China, diverting resources towards high-end products. According to Counterpoint Research, memory chip prices have quadrupled since September 2025 and are expected to continue increasing in the coming months.

As smartphone prices are adjusted to reflect higher memory costs, experts anticipate a potential shift in the Indian market, which was once heavily price-sensitive, towards premium products. This trend is likely to be fueled by budget phones becoming more expensive and the increasing affordability of higher-priced handsets through financing options.

Key Developments

Tata Chairman's Exit Poses Risk to Chip, iPhone, and Air India Investments: The future of India's first semiconductor plant and the nation's ambition to become a major supplier to Apple are facing uncertainty following Tata Sons Chairman N. Chandrasekaran's decision not to seek another term.

Bank of America to Invest $1.9 Billion in Jio Credit: Bank of America is set to invest up to $1.92 billion for a 49.9% stake in Jio Credit, a unit of Jio Financial Services. This deal represents a significant investment in India's financial services sector, following other substantial investments from Japan's Shriram Finance and Dubai-based Emirates NBD's stake in RBL Bank.

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