MC EXCLUSIVE India’s smartphone market braces for biggest slump in years as worsening supply squeeze drives up prices

Smartphones

• India's smartphone shipments may fall 12–15 percent in 2026
• Android phones to be hit hardest, iPhones remain resilient
• Rising prices and supply crunch to impact mass-market buyers

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India’s smartphone market is staring at a turbulent 2026, hit by a global supply crunch, a volatile rupee and surging component costs.

After a largely flat 2025, annual shipments are projected to plunge 12–15 percent this year, according to preliminary IDC data exclusively accessed by Moneycontrol. The firm has sharply revised its forecast from 4 percent growth to a steep contraction of 12–15 percent.

The downturn follows a marginal 0.5 percent increase in 2025, when shipments reached 152 million units, and is being primarily driven by a global chip shortage that began tightening supplies toward the end of the last year.

Perfect storm

If the projections hold, 2026 will mark the sharpest annual decline in recent years — steeper than 2022 when shipments fell 10 percent year-on-year to 144 million units — the lowest level since 2019, amid weakening consumer demand and high inflation, IDC said.

Android smartphones are expected to absorb most of the impact, while Apple’s iPhones are likely to remain comparatively resilient with modest mid-single-digit year-on-year growth, Upasana Joshi, senior research manager at IDC told Moneycontrol.

India’s smartphone market is grappling with a "perfect storm" of supply constraints and macroeconomic headwinds, she said.

“The supply crunch is not expected to ease until the first half of 2027. However, a recovery is anticipated shortly thereafter,” Joshi said.

Average selling prices (ASPs) are expected to rise alongside — and in some cases outpace — the fall in shipments.

The sub-$200 segment, which contributes over 55 percent to overall volumes, will feel the sharpest pain. Although premium and mid-premium categories are likely to continue expanding, growth in these segments will be slower than previously anticipated, she said.

Joshi added that negotiating Bill of Materials (BOM) costs will be critical for survival this year. Larger OEMs with scale advantages are better positioned to withstand escalating input costs, while smaller brands could face significant operational strain.

“While brands are expected to lean heavily on affordability schemes and consumer offers to stimulate demand, high currency volatility will likely limit marketing and overhead spend compared to 2025 levels,” she said.

‘Triple threat’

The first quarter of 2026 witnessed a wave of flagship and high-volume launches but industry observers and retail associations caution that a pronounced slowdown could begin in the second quarter as component shortages intensify and price hikes accelerate.

All India Mobile Retailers Association chairman Kailash Lakhyani said, "The industry is facing a triple threat: consistent price hikes, artificial supply constraints, and a resulting delay in consumer buying cycles.”

Retailers are being forced to invest more capital into stock that is increasingly difficult to secure, while consumers are becoming wary of the rising cost of ownership, he said.

The industry is bracing for what many describe as a "supply-starved" second quarter. Experts suggest that beyond logistics bottlenecks, some brands may be tactically holding inventory in anticipation of further price increases to avoid “losing money on old margins”.

Although affordability schemes such as no-cost EMIs and exchange bonuses are cushioning the immediate impact for consumers, weakening purchasing power is expected to hit the mass-market segment hardest by mid-year.

Up, up and away

Major smartphone brands in India, including Samsung and Chinese players such as Oppo, Vivo, Realme and Xiaomi, have been steadily raising prices since November.

The price hikes have extended into February, with all major brands, including Samsung, raising prices across multiple models and further increases are expected in the months ahead.

Industry executives say surging component costs, particularly memory and storage, are compelling companies to raise prices to safeguard margins and drive revenue growth. Several handset makers have trimmed sales volume targets by up to 20 percent and are shifting focus toward value growth over sheer volumes.