Mobile phone sales volumes fell 18-20% during the five-day Diwali period, even as overall sales value matched last year’s figures due to higher average selling prices
With memory chip manufacturers catering to AI infrastructure over consumer hardware, smartphone OEMs have been raising prices to pass on higher component costs to consumers
Rising component costs are expected to trigger further price hikes and push brick-and-mortar volumes down by up to 50% over the next three months
Weak consumer demand and rising prices weighed heavily on the offline smartphone market in the recently-concluded Diwali festive season.
According to industry body All India Mobile Retailers Association (AIMRA), mobile phone retailers saw sales volumes decline by 18-20% over the four-day period between Dhanteras (November 6) and the day after Diwali (November 9).
However, overall sales value remained broadly in line with last year’s festive season on the back of higher average selling prices.
Nevertheless, AIMRA noted that the “steeper contraction” in volumes squeezed margins and store profitability across mainline retail channels.
The industry body also said that offline smartphone sales volumes in the seven days preceding Dhanteras plunged nearly 40% as consumers delayed purchases in anticipation of festive offers. However, the demand picked up as customer footfall grew during the four-day period.
Giving a breakdown of the demand data, the report noted that urban consumers showed muted interest in upgrading devices, while Tier 1, Tier 2 and Tier 3 markets recorded stronger momentum – especially particularly in the mid-segment.
Most purchases were concentrated in the ₹30,000-60,000 price band after offers, while the premium segment also saw healthy demand, as per the report.
The sub-₹20,000 segment was particularly impacted by a shortage of fresh, competitive 5G models from leading brands. As a result, some value-conscious buyers shifted to brands such as HMD, Lava, Ai+, Tecno and itel, while others opted for pre-owned and refurbished devices to access higher specifications at lower prices.
AIMRA also said that financing emerged as another constraint during the festive season. The industry body claimed that only 60-70% of logged loan applications were approved, leaving a significant share of prospective buyers unable to complete purchases due to tighter underwriting and CIBIL-related rejections.
Performance also varied sharply across brands. Apple and Google Pixel saw strong demand, as did Xiaomi, which benefited from competitive pricing. Meanwhile, Vivo, OPPO and Samsung also maintained healthy sales by value but saw weaker unit volumes.
Realme saw volumes plunge by over 50% across regions, as per AIMRA. “This drop was triggered by uncompetitive pricing compared to Xiaomi, Samsung, and Vivo, zero new festive launches, and unlucrative consumer schemes. Market acceptance above ₹40,000 remains weak, dimming its near-term outlook,” said the industry body.
Largely to blame for the subdued festive season was price hikes by smartphone companies and rising commodity prices. This comes as the ongoing AI boom has dried up the supply of many critical components for entry-level and budget smartphone makers, which operate on razor-thin profit margins.
This is because memory chips makers are actively prioritising the demand from data centres and AI infrastructure providers, where margins are higher.
As a result, the per-device memory cost has already increased to $60-65, a 3X jump from around $20 in 2025, per a recent Jefferies report. As a result, the brokerage firm expects the prices of low-end smartphones to increase nearly 30%.
Overall, consulting giant Deloitte expects the memory shortage to last until as late as 2030.
To tide over this, smartphone makers have resorted to price hikes to pass on the higher component costs to consumers. Retail prices of existing smartphones have increased by as much 21% in India on an average, as per Counterpoint Research.
The memory crisis has also particularly impacted the budget segment of the market, where manufacturers have limited room to absorb cost increases without sacrificing margins. This explains why India, a relatively price-sensitive market, has been heavily impacted.
The trend is expected to hold going forward as well. Xiaomi has already signalled price increases of up to ₹4,000 across product categories, while other smartphone makers are preparing hikes of up to 15%.
With festive footfall already moderating, the AIMRA expects sales volumes at mainline brick-and-mortar stores to contract by as much as 50% over the next three months.