Smartphone Giants Eye India Amid Stagnation in Western Markets

The major players in the smartphone industry face mounting challenges as the dynamics of the global market shift. Slowing growth, potential cost increases due to reinstated Trump-era tariffs, and skepticism over AI’s role in phones have left companies seeking solutions. One promising answer lies in India, a nation poised to become the world’s third-largest economy with vast untapped potential in its smartphone market.

“There’s no other market of the size which still has about 50 percent penetration, about half a billion people without a smartphone. So there’s a lot of room for growth,” says Navkendar Singh, associate vice president of devices research at IDC India.

Unlike Western markets, where smartphones often complement other devices like laptops or PCs, Indian consumers primarily rely on smartphones as their sole gateway to the internet. Singh explains, “India is not a multi-device market. People don’t buy a laptop, a tablet, and a phone. A phone remains, for 700 million people, the first and the only device with which they access the internet, compared to about 220 million PC users in India, including corporate PCs.”

This distinction has shaped India into a unique market where strategies successful in the West need rethinking. The dominance of Vivo, a Chinese brand under the BBK Electronics group, highlights this difference. Vivo led the Indian market with a 15.8 percent share in the third quarter of 2024, outperforming global giants like Samsung. Vivo’s innovations in camera technology, such as the gimbal sensor stabilization in the Vivo X50 Pro, have resonated with Indian consumers.

“Because of cheap data and the entry of the Chinese brands into India over the past seven, eight years, [Chinese manufacturers] really democratized the price points,” Singh notes. This shift allowed India to transition from feature phones to affordable smartphones, paving the way for growth in higher-priced models.

The increasing acceptance of premium smartphones in India reflects a changing mindset. “Value for money has been the common psyche of an Indian consumer, but it is shifting swiftly towards buying more premium phones,” says Neil Shah, vice president at CounterPoint Research. “The phone has become central to every user, with a higher ROI than even buying a car, house, or insurance. Consumers are seeing smartphones as more of an investment opportunity.”

Data supports this trend. The average selling price of smartphones in India rose from $192 in the third quarter of 2020 to $293 in the same period in 2024. Apple has significantly benefited from this shift, with a reported 60 percent increase in market share between 2023 and 2024. Singh attributes this success to Apple’s strong brand appeal, stating, “Considering that the average selling price of Apple is so high, it’s an achievement that Apple has done well in the past few years. One of the major reasons is Apple is seen as an aspirational brand in India. It has a brand halo. Everybody would love to buy an iPhone. Not everybody can afford one.”

This aspirational appeal has also fueled sales of older iPhone models, which account for two-thirds to three-quarters of iPhone sales annually. However, Apple’s rise has come at the expense of other brands. OnePlus saw its market share decline by almost 40 percent year-on-year, while Realme and Samsung also experienced significant losses.

“Samsung had opened all fronts; they are fighting all the battles,” Singh observes. “I think there probably was some complacency also.” In 2024, Samsung’s missteps, including overpricing its A-series models, highlighted that even in a dynamic market like India, misjudgments can impact performance.

Contrastingly, the London-based company Nothing emerged as the fastest-growing phone brand in India in 2024, with a 567 percent year-on-year growth driven by its Phone (2a) model. “Nothing is trying to appeal to a similar consumer as OnePlus, at least in its first four or five years,” Singh explains. CEO Carl Pei emphasizes India’s importance, stating, “India’s vibrant market, with its deep appreciation for technology and innovation, is optimal for a brand like Nothing to thrive.”

Beyond handset sales, India’s potential as a manufacturing hub is drawing attention amid rising tensions between China and the West. India has already become a key player in Apple’s supply chain, with the iPhone 15 and 16 models partially manufactured in partnership with Foxconn. According to JPMorgan, by 2025, 25 percent of all iPhones are expected to be made outside China, with India playing a pivotal role. As of fiscal year 2024, $14 billion worth of iPhones—14 percent of global production—were made in India.

Samsung has also invested heavily in Indian manufacturing, opening the world’s largest phone factory in Noida in 2018. While some Samsung models are still produced in partnership with Chinese manufacturers, most of its phones are now made in India, Vietnam, or South Korea. India’s combination of low wages, technical expertise, and a large domestic market makes it an attractive alternative to China.

However, transitioning production entirely to India is far from straightforward. Singh cautions, “You might be hearing terms of ‘manufacturing in India’ and ‘made in India,’ but you have to be slightly careful when the case right now is really ‘assembled in India.'” True manufacturing, particularly for components like processors, remains highly complex and centralized in hubs like Taiwan.

TSMC, the Taiwanese semiconductor manufacturer, dominates global production of advanced chipsets, making around 90 percent of them. This includes processors for Apple, Nvidia, and Tesla. Singh underscores the geopolitical risks, noting that a potential Chinese invasion of Taiwan could disrupt global tech supply chains. “There’s no simple ‘divert manufacturing to India’ answer to that predicament,” he adds.

India’s evolving smartphone market offers immense opportunities but also presents unique challenges. As global tensions and market shifts reshape strategies, the next few years will test how effectively companies can balance innovation, affordability, and geopolitical realities in their pursuit of growth in India.