Summary
Highlights
Chinese smartphone companies are experiencing a downturn in India, with many expecting significant losses by 2026. The smartphone industry is not expected to perform well that year, primarily impacting Chinese brands that largely operate in the under ₹50,000 segment. Indian consumers are increasingly moving towards more expensive phones, leading to Apple's market share surpassing brands like Xiaomi and Realme, a surprising development.
Realme is struggling, with employee layoffs and teams merging back into OPPO, suggesting Realme might become an online-centric sub-brand. OnePlus is also being integrated more closely with OPPO, shifting focus towards OPPO's own devices. Xiaomi is facing a sharp decline in sales, with its Redmi Note series losing popularity. Transsion Holdings (Infinix, Tecno, Itel) is also gradually disappearing from the market. This is partly due to rising component costs, making it difficult for companies focusing on affordable phones to compete.
Since 2020, Chinese companies have faced increased scrutiny from the Indian government, leading to tax evasion investigations and audits. Many Chinese companies' plans for factories in India have not materialized, and some have ceded stakes in their operations to Indian companies, such as Dixon taking a 51% share in some manufacturing plants. Bhagwati (formerly Micromax) has taken over Vivo's factories in India, indicating a shift towards Indian control over manufacturing processes. Chinese companies are wary of sharing technical know-how with Indian partners, fearing replication, a tactic China itself used in the past.
The Indian government is also restricting Chinese entry into other sectors, particularly automobiles. While MG (owned by Chinese group SAIC) has partnered with JSW in India for assembly, direct entry for Chinese car manufacturers like BYD is often denied. This is to prevent a repeat of the smartphone industry's scenario, where Chinese companies dominated, and to protect Indian brands like Maruti.
India is seeing a rise in domestic manufacturing and assembly, with companies like Lenovo, Asus, and Apple increasing their production in the country. Micron is setting up facilities for testing, assembling, and packaging memory modules, signaling further advancements in India's electronics manufacturing capabilities. While currently in the assembling phase, full fabrication is expected by 2026. This shift is reducing reliance on Chinese manufacturing and fostering an indigenous ecosystem. Companies like Google and Samsung are also expanding their R&D centers in India, leveraging Indian engineering talent.
Chinese smartphone companies are expected to play defensively in the coming year, with minimal growth in the budget segment and an anticipated market decline. They are likely to invest heavily in marketing, but consumers are advised to be cautious. Apple is emerging as a significant threat to Chinese brands in India, as the market moves beyond price-sensitive purchases to value and premium experiences. The golden era for Chinese companies in India's smartphone market appears to be ending, with a potential shift beginning in 2026, opening opportunities for Indian companies.