Rising costs slow India's 5G shift, revive demand for 4G phones: Report

Rising component and memory costs are widening the price gap between 4G and 5G smartphones, prompting manufacturers to expand 4G offerings in India's budget segment

India's smartphone market is showing a reversal in the transition from 4G to 5G. While 5G networks continue to expand and 5G subscriptions are rising, 4G smartphones are gaining ground in the price segments where affordability is under pressure. According to a market tracker Counterpoint Research, 4G smartphone shipments in India are expected to grow 3 per cent year-on-year in 2026, even as the overall smartphone market declines. The share of 4G smartphones is expected to rise from 11 per cent in 2025 to 13 per cent in 2026 and 15 per cent in 2027. The number of smartphone makers offering 4G models in the Rs 10,000-20,000 segment has also increased from two in 2025 to 12 so far in 2026.

 

 

The change is being driven by the cost of putting smartphones on the market, rather than a lack of demand for 5G connectivity.

Network rollout is not the problem

India's 5G infrastructure has expanded much faster than the handset market is now moving towards 5G.

 

As per government data, 5G services were available in 99.9 per cent of India's districts, with 5.23 lakh 5G base transceiver stations installed as of February 28, 2026.

 

Ericsson's June 2026 Mobility Report puts India's 5G subscriptions at 430 million at the end of 2025, accounting for 35 per cent of total mobile subscriptions. 4G still accounted for 46 per cent. However, Ericsson expects 5G subscriptions to reach more than 1.1 billion by 2031, while 4G subscriptions decline from about 570 million in 2025 to nearly 160 million in the same period.

The network and subscription data therefore point to a continued migration towards 5G. The slowdown is more visible in the smartphone market, particularly at the lower end.

 

This is significant because the device transition had already moved a long way. Counterpoint had reported that three out of four smartphones shipped in India in 2024 were 5G-capable.

The economics of a budget 5G phone have changed

The biggest pressure is coming from smartphone component costs, particularly memory.

 

Counterpoint Research reported in July that smartphone memory prices had increased by more than 80 per cent quarter-on-quarter in the second quarter of 2026. Its analysis found that component costs for low-end smartphones with similar configurations had risen 70 per cent year-on-year in the quarter, with memory accounting for most of the increase.

 

The effect is visible in the mass-market segment. Counterpoint's June-quarter analysis said smartphone memory's share of the bill of materials had risen from below 20 per cent to more than 45 per cent for smartphones priced below Rs 15,000. It also found that average smartphone prices had risen about 15 per cent by the end of the second quarter. Shipments in the sub-Rs 15,000 segment fell 45 per cent year-on-year.

This leaves manufacturers with fewer options in the lower price bands. A 5G smartphone needs to accommodate the cost of 5G connectivity alongside memory, storage, display, camera and other components. When the overall bill of materials rises, maintaining a 5G device at the same retail price becomes harder.

 

Counterpoint's latest report directly links the widening price gap between 4G and 5G smartphones to the recovery in 4G demand. It said consumers in the sub-Rs10,000 and Rs 10,000-20,000 segments are turning to 4G devices for lower prices, while manufacturers are expanding their 4G portfolios as 5G models move up the price ladder.

4G is moving into mid segment

The change in the Rs 10,000-20,000 segment is more important than the headline growth in 4G shipments.

 

Counterpoint analyst Prachir Singh said the segment is becoming a key area for 4G demand as consumers look for specifications and device performance without the higher price associated with 5G. The number of brands offering 4G smartphones in this band has risen from two in 2025 to 12 in 2026 so far.

 

This also changes how 4G is positioned in the market. It is no longer limited to the cheapest smartphones. Manufacturers can use 4G connectivity to preserve spending on other parts of the device, such as memory, storage, display or cameras, while keeping the retail price lower.

The affordable smartphone market is under wider pressure

Counterpoint's global forecast found that sub-$200 smartphone shipments are expected to fall about 40 per cent between 2025 and 2030, with more than 230 million annual shipments disappearing from the market. It attributed the decline to higher memory and chipset costs, rising minimum specifications and reduced availability of low-priced devices.

 

The research also expects some consumers to move into higher price bands, but not all lost entry-level demand to be replaced by more expensive smartphones. Some consumers are expected to retain their existing phones for longer, while used and refurbished devices absorb part of the demand.

 

India is already showing some of these effects. Omdia reported that smartphone shipments fell 13 per cent year-on-year in the second quarter of 2026 as rising memory costs triggered handset price increases and reduced affordability among mass-market consumers. Omdia expects elevated memory costs to keep prices high through the rest of 2026, with broader price normalisation unlikely before the first half of 2027.

 

That gives manufacturers a reason to keep 4G devices in the portfolio for longer. If component costs remain high, removing 4G too quickly could leave a gap between what consumers can afford and what manufacturers can profitably sell.

5G transition is slowing, not reversing

Counterpoint's forecast does not suggest that 4G will overtake 5G smartphones again. Its data points to a different outcome: 4G will retain a larger role in the lower price bands for longer than expected.

 

The research firm expects the 4G share of India's smartphone shipments to rise from 13 per cent in 2026 to 15 per cent in 2027. It also expects component prices to remain elevated, meaning the return of 4G cannot be treated only as a temporary response to a single quarter of higher costs.

 

This creates a split in India's connectivity transition. On the network side, 5G has reached almost every district and hundreds of millions of subscriptions have already moved to the technology. On the device side, cost pressures are keeping 4G relevant in the part of the market where a few thousand rupees can determine whether a consumer upgrades at all.