An old festive trick stops ringing for phone makers
For years, shoppers have lined up to buy smartphones around the holidays, anticipating deep discounts and excellent deals. However, the 2026 festive season could be different as memory and component costs soar. With smartphone production facing a shortage of basic wafers, industry experts predict a tougher year for manufacturers. India's smartphone market is expected to shrink by 10% year-over-year as volumes fall, according to Prachir Singh, a senior analyst at Counterpoint Research.
The memory shortage is not confined to India. Global smartphone production dropped 7.4% year-over-year, with IDC reporting 276.3 million units shipped in Q2 2026. This marks the second consecutive quarter of decline, and memory prices continue to climb despite suppliers' efforts to boost capacity. Market research firm TrendForce expects conventional DRAM contract prices to rise 13-18% in Q3 2026, up from a 93-98% increase in Q1.
The shortage is a result of increased usage of memory in AI infrastructure. Major chip suppliers, such as SK Hynix, Samsung Electronics, and Micron Technology, have shifted production to produce memory chips for Nvidia's AI accelerators. This shift has led to a shortage of conventional memory used in smartphones, PCs, and other consumer devices.
SK Group chairman Chey Tae-won stated that supply of the basic wafers needed to manufacture chips is lagging demand by more than 20%, with significant expansions in Korea, the US, and Japan reaching meaningful output between H2 2027 and 2028.
Smartphone manufacturers have already passed on higher costs to consumers, with Realme, Oppo, Vivo, Samsung, and OnePlus raising prices for select models. Apple also increased prices on several iPhone models in India following the launch of the iPhone 18 Pro series. The memory crunch is affecting manufacturers worldwide, with global smartphone production down 7.4% year-over-year.
Industry experts predict a difficult festive season, with higher prices likely to push more buyers towards financing options and a shift towards offline purchases.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
