India’s Smartphone Market Is Shrinking, But Why Are Phone Prices Still Rising?

India’s smartphone market is shrinking sharply in volume even as the average price of devices continues to rise.

Smartphone shipments fell 11.1% year-on-year to 33.2 million units in the second quarter of 2026, taking first-half shipments to 64.2 million units, the lowest first-half volume in five years, according to the International Data Corporation’s (IDC) Worldwide Quarterly Mobile Phone Tracker.

The H1 shipments were down 7.9% from a year earlier, but the market grew 3.6% in value, showing how higher prices are cushioning the impact of falling volumes.

Q1 Decline Deepens In Q2

The slowdown had already emerged in the first quarter of 2026, when shipments fell 4.1% year-on-year to 31 million units.

IDC had attributed the decline to subdued post-festive demand, higher device prices and cautious consumer spending, while brands had also built inventory ahead of expected memory cost increases.

The contraction deepened in Q2 as the global memory shortage continued to push up component costs, leaving brands with less room to absorb higher costs or use discounts to stimulate demand, the report said.

Why Are Smartphone Shipments Falling?

The biggest damage is being seen at the bottom of the market. Shipments of smartphones priced below $100 plunged 74.3% year-on-year in the second quarter, with the segment’s share collapsing to 4.5% from 15.6% a year earlier.

Maintaining profitability in this segment has become increasingly difficult, resulting in fewer launches and weaker channel support, the IDC report said.

At the same time, some manufacturers have brought back or extended 4G models as entry-level 5G smartphones become more expensive. This pushed 4G’s share to 11.1%.

However, according to the IDC, this is a temporary supply-led cushion rather than a lasting solution, with consumers likely to face higher-priced 5G devices once existing 4G inventory runs out.

Consumers priced out of the entry-level segment are also moving up the price ladder. The $400-600 mid-premium segment grew 60.3% year-on-year, with its share almost doubling to 8.6% from 4.8%, the data from the report showed.

The $100-200 mass-budget category, which remains the largest segment with a 46.8% share, recorded flat shipments. Meanwhile, the $200-400 segment declined 8.1%, while the $600-800 category remained flat and the $800-plus segment fell only 5%, as per the report.

This means the contraction is concentrated at the lower end, while higher-priced segments are proving relatively resilient.

Why Are Prices At Record High?

The average selling prices (ASP) rose 14.4% year-on-year to a record $315 in the second quarter, up from $302 in Q1. Market value nevertheless grew 1.7% in Q2, the IDC report showed.

Memory cost inflation is raising component expenses across smartphone portfolios, the report said.

Brands are also pulling back on discounts to protect margins, removing a key mechanism that has traditionally supported demand in India.

Aditya Rampal, senior research analyst, Devices Research, IDC Asia Pacific, said that memory driven cost pressure was seen across the product lineup. "This marks a sharp reversal from the same period last year, when early festive discounts and offers were rolled out to build momentum ahead of the season," he said.

"This year, both brands and channels have leaned away from that playbook, thinning margins have left little room to use price as a demand lever, pushing prices higher instead of lower," Rampal added.

Samsung, Apple Gain; Chinese Brands Lose

Samsung and Apple were among the most resilient major brands in the second quarter. Samsung’s market share rose to 16.4% from 14.5%, while Apple’s increased to 8.5% from 7.5%. Samsung shipments were broadly flat, while Apple shipments grew 0.7%, the IDC data showed.

In the first quarter, Samsung’s share had increased to 17.1% from 16.4%, while Apple’s share had marginally declined to 9.4% from 9.5%.

Vivo remained the largest brand in Q2 with an 18.4% share, followed by Samsung at 16.4%, OPPO at 13.8%, Xiaomi at 9.7% and realme at 9.3%.

Chinese brands have faced greater pressure because of their traditional dependence on low-cost and mass-market smartphones.

Vivo shipments fell 13.9% in Q2, OPPO declined 8.5%, Xiaomi 10% and realme 14.2%. iQOO recorded a sharper 61% decline, as per the IDC data.

Chinese manufacturers are shifting towards higher-margin products, but convincing consumers accustomed to budget pricing to accept substantially higher prices remains difficult, the report said.

Online Sales Weaken, Offline Gains Share

The downturn is also changing where consumers buy smartphones. Online shipments declined 19.8% year-on-year in the second quarter, reducing the channel’s share to 41.9% from 46.4%.

IDC attributed the sharper online decline partly to the withdrawal of discounts and offers, particularly for entry-level models and flagship devices.

Offline shipments fell only 3.6%, taking their share to 58.1% from 53.6% as brands relied more heavily on physical stores to manage pricing pressure.

Why Apple's Shipments Can Decline?

According to the report, Apple faces a supply led squeeze, with older iPhones set to get costlier and no attractive festive discounts expected like in previous years.

"As a result, iPhone shipments are likely to decline mid-single digits in 2026 from 14.3 million units in 2025," said Upasana Joshi, senior research manager, Devices Research, IDC Asia/Pacific.

Demand hasn’t gone away, people are simply waiting longer to buy, and those planning an upgrade may want to move sooner rather than later, before prices go up further, she remarked.

What's Projected For H2?

IDC expects the second half of 2026 to be more challenging as brands exhaust lower-cost inventory and face the memory shortage through the festive season.

Shipments are expected to decline by more than 15% in H2, taking full-year volumes to roughly 128-130 million units.

"Rising prices are now touching every corner of India’s smartphone market. Festive discounts, typically the trigger for purchases, look unlikely this year as cost pressure builds through H2 2026," Joshi said.