26/10/26, Chinese smartphone brands are losing ground in India, with rising memory prices pushing up device costs, weakening demand in the entry-level segment, and forcing a rethink on product strategies as the market records its weakest third quarter in a decade

The combined market share of Chinese players fell to around 68 percent in the September quarter from 75 percent a year earlier, analysts said.

Shipments were down 20 percent in the September quarter from the year-ago period, Counterpoint Research said. Omdia estimates a steeper 26 percent decline to 35.8 million units. IDC's preliminary data indicate a 23-25 percent fall to 35-37 million units during the festive-build period.

Chinese original equipment manufacturers (OEMs) have been hit the hardest by repeated price increases in the entry-level segment, which traditionally drives their volumes. Sanyam Chaurasia, principal analyst at Omdia, said.

“Their share declined from 75 percent to 68 percent in the July-September quarter,” he said.

Fewer affordable and online-exclusive launches weakened September inventory for Amazon and Flipkart's festive sales. Reduced surplus inventory constrained supplies to general trade retailers, Chaurasia told Moneycontrol.

“Chinese brands' share decline reflects near-term cost pressures and broader market changes. Rising DRAM and NAND prices disproportionately affect the budget and mass-market segments, where consumers are more price-sensitive and OEMs have less room to absorb cost increases,” Shubham Nimkar of Counterpoint Research told Moneycontrol.

Memory shortage is worsening as manufacturers such as Samsung Electronics, SK Hynix and Micron Technology prioritise higher-margin products for AI data centres.

According to TrendForce, memory components, which historically accounted for 10-15 percent of a smartphone's bill of materials, rose to 30-40 percent for certain mainstream configurations earlier this year.

Contract prices for an 8GB RAM and 256GB storage configuration nearly tripled YoY in the first quarter.

DRAM prices are expected to rise another 10-15 percent sequentially in the December quarter, while NAND flash prices could increase 15-20 percent, further squeezing entry-level manufacturers.

Vivo's shipments fell 34 percent YoY year to 6.4 million units in the September quarter, while Oppo declined 24 percent to 4.9 million units and Xiaomi dropped 28 percent to 4.7 million. Samsung reclaimed the top position with 6.7 million units, Omdia said.

IDC analyst Upasana Joshi said the decline in Chinese brands' share was largely cyclical, reflecting cost pressures rather than a loss of consumer preference.

Their concentration in the sub-$200 segment makes them particularly vulnerable to memory inflation. Shipments of below-$100 smartphones fell 74 percent YoY in Q3, she told Moneycontrol.

“We expect continued pressure on Chinese OEMs through the second half of 2026 and into 2027,” Joshi said. Elevated prices, limited discounting and inventory accumulated since the second half of 2026 would keep shipments weak in the December quarter, she said.

The festive season may support mid-premium and financed purchases but will not offset longer replacement cycles and higher entry prices. “Chinese OEMs, concentrated in the sub-US$200 bands, remain the most exposed,” she said.

Chaurasia said Chinese manufacturers were reducing entry-level models and expanding higher-value portfolios to protect margins.

Nimkar said they would likely combine price increases, selective cost absorption and portfolio optimisation to defend their value-for-money proposition.

Indian brands gain ground

Domestic smartphone brands' combined share rose to 7 percent in Q3 from 2 percent in last year, Counterpoint said, as local manufacturers increased shipments in lower price segments.

Joshi said Indian brands had an opening in affordable devices but scale remained a constraint because memory suppliers prioritise larger buyers. “Others include offline distribution depth, the need to compete on features at rising component costs, and thin margins at the lowest price points. Without secure supply, the opportunity is difficult to convert into meaningful shares,” she said.

Lava could benefit in entry-level 4G and affordable 5G smartphones. However, scaling up would require stronger distribution, inventory availability and after-sales infrastructure, Chaurasia said.

Shift to premium phones

Chinese manufacturers are cutting entry-level models, adjusting specifications and expanding mid-premium portfolios.

Some were shifting from 6GB+128GB to 4GB+64GB configurations and making selective display compromises, Chaurasia said.

IDC data shows shipments in the $400-$600 segment grew 60 percent YoY. Chinese brands are expanding premium offerings, including camera innovations and AI features, to improve margins.

Samsung's broad portfolio, distribution and financing programmes position it to benefit. Apple, which commanded 27 percent of smartphone market value in the second quarter, also stands to gain from premium demand, though higher prices and longer replacement cycles could limit unit growth, Joshi said.

Nimkar cautioned that neither company was guaranteed to absorb all the share lost by Chinese manufacturers, as affordability pressures affect the wider market.i

Article written by Danish Khan

Source: Network18