Inside India newsletter: Chip squeeze hits Chinese smartphones in India as Apple, Samsung gain an edge

Hello, this is Priyanka Salve, writing to you from Singapore.

Welcome to the latest edition of "Inside India" — your one-stop destination for stories and developments from the world's fastest-growing large economy.

Chinese brands dominate the Indian smartphone market, claiming four out of the top five spots, as their low-priced and feature-rich phones appeal to the cost-conscious Indian consumer.

But as memory prices surge and Chinese phone-makers pass on those costs, customers are beginning to gravitate toward premium brands such as Samsung and Apple, as financing options improve affordability.

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Rising memory chip costs are having a contrasting effect on the fortunes of budget Chinese brands and mid-market and premium American and South Korean smartphone companies in India, the world's second-largest market by volume.

It is the end of the sub-$150 smartphones, experts told CNBC, adding that after the current inventory is exhausted, newer launches with similar features in this category will have to be priced much higher to account for the rising memory costs.

Newer Chinese phone models in India could cost anywhere between $200 and $250 compared to under $150 earlier, according to Neil Shah, co-founder at Counterpoint Research. As per the market intelligence firm's data, brands in the sub-$150 category have already raised smartphone prices by up to 40%.

Chinese smartphone companies dominate the budget segment with their feature-rich products. But it has become nearly impossible for these companies to maintain affordability while absorbing the rising costs of memory chips.

Higher prices diminish the value-for-money proposition of Chinese smartphones among Indian consumers, but at the same time, it increases the appeal of mid-price and premium handset brands like Samsung and Apple for consumers, Shah said.

Market data intelligence company IDC reported last week that smartphone shipments in the first half of 2026 in India dropped to 64.2 million units, with the entry-level tier seeing a steep decline. While sales volume fell 7.9% year on year, in terms of value they grew 3.6% as average selling price hit a record of $315.

Sales of Chinese smartphone companies, in particular, fell sharply as they struggled to convince "price-sensitive buyers" of their "higher price tags," IDC said in its report. Meanwhile, iPhone 17 remained the top-shipped device consecutively for the first two quarters of 2026, it said. 

In the June quarter, smartphone shipments of Vivo fell 13.9%, Oppo declined 8.5%, Xiaomi dropped 10%, and Realme crashed 14.2% from a year ago, as per IDC. Among all major Chinese brands, OnePlus, which serves the higher-end category, reported the lowest decline of 2.5% year on year.

Upasana Joshi, senior research manager, devices research, IDC Asia Pacific, told CNBC that the global memory chip shortage had pushed prices up and "hit entry-level demand hardest, the segment Chinese brands rely on most."

Chinese brands all saw steep declines, Joshi said, adding that Samsung and Apple were the only major names "to hold steady and gain share." Samsung and Apple's shipments during the June-quarter rose 0.4% and 0.7%, as per IDC.

During the quarter ended June, the gap between India's leading smartphone seller Vivo and the second player, Samsung, narrowed.

While Samsung's market share increased by nearly 200 basis points, Apple's rose 100 basis points in the June quarter. Vivo's market share fell by 60 basis points during the same period, according to IDC, and by 140 basis points, according to estimates from Counterpoint Research.

Samsung, which has a wide portfolio of smartphones in India ranging from $200 to upwards of $800, has been going head-to-head with Vivo in the $200-$300 price segment, according to experts.

While the South Korean company has access to in-house supply of memory chips, Vivo and many other Chinese firms have relied on chips from MediaTek, SK Hynix and Samsung, said Shah of Counterpoint Research.

When the prices of memory chips started rising last year, many Chinese smartphone companies shifted to chips made by UNISOC and CXMT, which helped them protect their market share for a while, Shah said, but added that this arrangement was not sustainable.

CXMT recently raised funds to expand its capacity to serve the AI and data center market in China, diverting resources towards high-end products, he said.

According to Counterpoint Research, prices of memory chips have increased 4 times since September 2025 and are expected to rise further in the coming months.  

As smartphone prices rise to account for higher memory costs, experts believe the once price-sensitive Indian market could shift toward premium products, especially as budget phones become expensive and financing options make high-priced handsets affordable.

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