Forbes India
The smartphone market in India, already under pressure from a chip shortage since late 2025, has been hit further by the ongoing West Asia crisis that is driving up costs through supply chain disruptions.“Tensions around the Strait of Hormuz have introduced fresh uncertainty into the global electronics supply chain. Airspace disruptions across key Gulf transit corridors have affected the flow of logistics and components, influencing both exports and availability,” says Prabhu Ram, VP-Industry Research Group, CMR, a media and media services group.While shipments have already seen a 9 percent year-on-year decline, says Counterpoint Research, a global market research and analytics company, analysts have cut down estimates as well. Counterpoint sees shipments at 139 million units, down from 142 million they had projected for 2026, while Omdia, a tech-focussed market research firm, has revised its estimate to 142-145 million from 148 million during the same period. Tech intelligence company IDC projects shipments to fall to 132 million units from 152 million last year.The geopolitical crisis comes close on the heels of an unprecedented global chip shortage that began in late-2025, as resources for consumer electronics were chanelled towards solutions to support AI workloads that require a large amount of memory. This created a demand-supply imbalance, raising DRAM (Dynamic Random Access Memory) prices for products like smartphones and prompting manufacturers to pass on the costs to the customers.“There are two reasons for the downgrade [of the shipment estimates],” says Tarun Pathak of Counterpoint. “The first is a sharp rise in memory chip costs, with NAND (NotAND) and DRAM (Dynamic Random Access Memory) prices going up 40-50 percent. The ongoing conflict is also creating a sense of uncertainty.”According to data from The All India Mobile Retailers Association (AIMRA), Realme phones have seen the steepest price hikes, by nearly 53 percent, while prices of Vivo, Oppo and Xiaomi products have gone up by 40, 41 and 32 percents, respectively. Kailash Lakhyani, founder and chairman of the association, says Q2 (April-June) may be the worst for these brands. “We expect entry-level phones from leading brands to start at Rs20,000, compounded by the Gulf crisis,” he adds.Also Read: India eyes PLI 2.0 to deepen local value in mobile assembly makeoverPathak says further: “The entry-tier segment (sub-Rs15K) has seen the most impact due to the memory price hike situation, with its market share going down to 33 percent in Q12026 (January-March quarter) from 41 percent in Q32025. In contrast, the share of the Rs15-30K segment jumped from 35 percent to 45 percent during the same period as the prices of many models operating in sub-Rs15K segment have gone up.” He expects another 15 percent hike in the April-June quarter, with new model launches becoming more expensive, some by 30-40 percent.Prashant Singhal, markets & telecom leader, EY India, adds: “Component costs have escalated 1.5-2x over the past year, with RAM and chipset prices rising 60-70 percent. It was led by AI-led demand and data centres. The war has disrupted logistics and increased costs further, particularly for routes dependent on West Asia.”Forbes India visited some retail stores in Delhi where employees said prices have increased not only for smartphones but laptops as well. They added that some players are switching to online sales to cut down the costs of physical retail networks. The publication also reached out to Samsung, Xiaomi, Vivo and OnePlus for comments but haven’t received any response till the time the article was published.Experts have said things may not improve anytime soon and the sub-Rs15K segment will feel the sharpest pinch. “If there is no solution to the West Asia crisis, shipment projections may be cut further as consumer sentiments have been declining since March. The July-September quarter might also be difficult for these brands,” says Pathak.Analysts have called on smartphone makers to localise or diversify production, taking cue from Apple that has deepened its manufacturing footprint in India. “Over the past 12-18 months, India’s smartphone market has shifted from being driven by demand, to being driven by geopolitics and supply-chain management. Brands must now focus on diversified sourcing and resilient logistics,” says Ram of CMR.Experts have also pointed out that globally, as well as in India, no brand barring Apple has managed to make a mark since the second half of 2025. Samsung introduced the Galaxy Z TriFold device in December, but won’t restock it globally, after the first batch is sold out, due to high input costs. Asus also pulled out of the smartphone race, ending production of its Zenfone and ROG lineups as it redirected resources towards AI hardware. Brands like Realme and Xiaomi also had a patchy 2025, with the latter collapsing from being the No. 1 brand to ending up at No. 5 (according to data from IDC). Some reports suggest that smartphone makers may have incurred losses of up to $500 million in the first quarter of the year.Lakhyani of AIMRA says 2026 may be the most challenging year for some of these brands. “Despite massive advertising, Samsung has lost significant share over the years in the mid-segment. Small brands like Nothing, OnePlus, Lava may find the year challenging as the market squeezes smaller players.”
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