Chinese phone makers built their dominance in India on cheap, feature-packed handsets. AI’s demand for memory chips has made those phones much more expensive to build, and Chinese brands’ market share has fallen to its lowest level in more than eight years.
Chinese smartphone brands, including Vivo, Oppo and Xiaomi, have dominated India’s market for years. Their combined share fell to about 67–68% in the July–September quarter, according to Omdia and Counterpoint Research. That is down from 71% in the previous quarter and 75% a year ago, and the lowest in more than eight years. The peak was about 80% in mid-2020.
The cause is the global shortage of memory chips. AI data centres need large amounts of memory, and as chipmakers shifted production towards higher-margin AI memory, the cheap memory chips used in budget phones became scarce and expensive. Counterpoint has reported that component costs for low-end phones rose by 20–30%. Because Nvidia has started using smartphone-style memory in AI servers, the effect has been even sharper.
For a company selling phones below ₹10,000–15,000, those cost increases are difficult to absorb. Chinese brands have responded by cutting budget models, reducing memory and storage in some phones, and focusing on mid-priced and premium devices, which earn more. Xiaomi shipped 4.7 million phones in the quarter, down 28%, after cost pressures forced it to compromise on pricing and specifications.
Who is gaining
Two groups have benefited. The first is the premium brands. Samsung regained the top spot in India with about 17% of the market, according to Counterpoint, and Apple also gained share. Both have strong premium lineups, upgrade programmes and better bargaining power with chip suppliers, which helps them cope with higher costs.
The second group is more surprising: Indian brands. The combined share of domestic brands such as Lava and Ai+ rose to 7% from 2% a year ago, their highest since late 2018. Ai+, launched only in July 2025, more than quadrupled its shipments in the quarter. As Chinese brands pulled back from the cheapest segment, Indian companies stepped in to serve price-sensitive buyers.
A much smaller market
The overall market is shrinking. India shipped about 35.8 million smartphones in the quarter, down 26% from a year earlier according to Omdia, the weakest third quarter since 2016, even with the festive season beginning. Counterpoint put the decline at about 20%. Higher prices are putting phones out of reach for some buyers or causing them to delay upgrades.
This is not limited to India. IDC has forecast that global smartphone shipments could fall by about 13% in 2026, the largest decline on record, and has warned that phones priced below $100 may stop being viable even after memory prices settle.
What next
There are several implications for India. Budget phones have been how hundreds of millions of Indians got online, so higher prices could slow digital adoption in smaller towns. The space Chinese brands have left gives Indian manufacturers a real opportunity, supported by production-linked incentives. And it shows how the AI boom is affecting areas well beyond technology stocks. Data centre demand on the other side of the world is changing which phones Indian consumers can afford this Diwali.
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