Budget smartphones, laptops get pricier in India as AI crunches memory chip supply
Chip companies are making more high-bandwidth memory chips—used in graphic processing units that Nvidia sells for artificial intelligence data centres. This has created a supply shortage of general-purpose chips.
NEW DELHI: Prices of budget smartphones and laptops in India have risen by almost 10% and a further increase may be on the anvil next year. The reason: memory chips, a crucial component of these devices, have become 50% more expensive since January, and an additional 50% price hike could be on the cards—making the most-sold phones and laptops more than 10% more expensive over the next year.
Memory chips have become costlier because manufacturers such as Micron Technology in the US and South Korea’s Samsung and SK Hynix have started focusing most of their manufacturing lines on making high-bandwidth memory chips—used in graphic processing units that Nvidia sells for artificial intelligence data centres. This has created a supply shortage of legacy, general-purpose chips, which are used in smartphones and laptops alike.
A typical memory chip used in smartphones and laptops accounts for 10-15% of the cost of production—an average of $30-60 in budget phones and laptops. Compounding this issue are the margins, which typically are less than 10% in the budget categories of smartphones under ₹20,000 and laptops costing less than ₹50,000.
These categories, as per market research firm IDC’s reports, accounted for 60% of the 70 million smartphones and 5 million laptops sold in the first six months of this year. As a result, companies in India are now staring down the barrel of yet another weak period of sales—smartphone and laptop sales have remained stagnant since 2021.
Sensitive price point
“The ₹50,000 price point is sensitive for laptop sellers. Even with just a 10% price hike, value-sensitive buyers will most likely put off their purchases and wait for the next period of sales for the prices to fall, before buying," said Bharath Shenoy, research manager at IDC India and South Asia. He added that with memory chip prices set to rise further, this could lead to a slowdown in sales until at least June next year.
Companies are already feeling the heat. On 18 November, Beijing-based Xiaomi’s global president Lu Weibing acknowledged the pricing pressure on smartphones, the company’s core offering.
“I expect pressure to be much heavier next year than this year. Overall, consumers are likely to see a sizeable rise in product retail prices. Some of the pressure may have to be addressed through price hikes, but price increases alone won't be enough," Weibing told analysts on a post-earnings call.
In response to Mint’s queries, a Xiaomi India spokesperson said, “The recent AI supercycle has triggered an industry-wide surge in memory costs. We are closely tracking these market shifts… As input cost pressures continue, the industry may witness broader price revisions in 2026."
A senior supply chain industry official with direct knowledge of Apple’s pricing strategy added that iPhone prices are unlikely to change.
“Apple would only change its official pricing if there is a change in local taxes. But otherwise, all supply chain factors are baked into their prices right from when a product is launched—meaning that there will be no official product price changes as a result of the memory chip crisis," the official said.
In response to Mint's queries, Francis Wong, chief marketing officer of Realme India, said, "We aim to absorb the increased costs in 2025 through stronger supply chain management, our 'Make in India' advantage and tighter operational controls, without passing the burden on to consumers, unlike many other brands. Starting in 2026, price adjustments will begin with new product launches."
Queries sent to Oppo, Vivo, Samsung, HP, Dell and Lenovo did not receive responses until press time.
Stock downgrades
Brokerages, too, are factoring in the impact. On 17 November, Nomura downgraded Xiaomi’s stock in China, in anticipation of the company facing cost pressures due to rising memory chip prices. On the same day, Morgan Stanley downgraded Lenovo Group’s stock, stating that Lenovo could face “significant earnings impact for every 10% increase in memory costs."
Tarun Pathak, research director at Counterpoint Technology Market Research, echoed a similar view for smartphones.
“This is likely to impact the low-end of the smartphone market the most as margins there are very thin. We have already seen 6-8% price hikes in some smartphones across sales channels, especially at retail prices of under ₹20,000. This is likely to impact demand for smartphones in the first six months of next year. New products being launched will already bake in the higher pricing into their retail offerings," Pathak said.
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