India’s smartphone market is taking a direct hit from an AI-driven memory chip shortage, making it the clearest case of the global ‘AI crowding out consumer electronics’ effect. Samsung, SK Hynix, and Micron are shifting capacity from standard RAM and storage chips to high-bandwidth memory (HBM) because HBM earns far higher profit per wafer than the memory used in phones and laptops, tightening consumer-grade supply and pushing costs up. According to Counterpoint Research, India’s Q2 (April–June) smartphone shipments fell 10% YoY — the steepest single-quarter drop in six years — while China only slipped 2% in the same period. The key difference is that about 60% of India’s phone market sits in the sub-INR 20,000 (~USD 210) price band, making it most sensitive to rising memory costs. Entry-level models under INR 15,000 (~USD 150) saw shipments plunge 45% YoY, hit hardest because Chinese brands have heavy exposure in that tier. Counterpoint VP Tarun Pathak noted that consumers won’t abandon phones, but replacement cycles are expected to stretch from ~3.5 years to 4. Samsung was the only major brand to grow shipments in Q2 India (+2% YoY); Apple’s shipments dipped 3%, but mainly due to supply constraints, not weak demand. Premium brands, whose buyers are less price-sensitive and benefit from widespread installment financing, have been noticeably less affected.