Buying a smartphone in the coming days might become a bit more expensive for the average person. Industry experts believe that smartphone prices could increase by 10 to 15 percent. The biggest reason behind this is the growing presence of artificial intelligence, or AI. Most smartphones, especially flagship models, are now equipped with AI, which requires high-performance chipsets and memory modules. This is why making smartphones has become more expensive for companies.
Rapid Increase in Chipset and Memory Costs
To fully utilize AI capabilities in smartphones, advanced chipsets and more memory are needed. This technology makes smartphones faster, smarter, and more powerful, but it also comes at a higher cost. According to Neil Shah, Vice President at Counterpoint Research, the cost of chipsets and related memory units is increasing rapidly. When companies use new technologies and advanced nodes for flagship phones, the manufacturing cost increases significantly.
Flagship Phones Will Be the Most Affected
The rising costs will directly impact phones that offer the most advanced technical features, i.e., flagship models. These are smartphones that cost above ₹30,000. Until now, companies were somehow adjusting their costs to keep prices stable, but it is becoming increasingly difficult to do so. Experts believe that companies now have few options and will be forced to increase the prices of these phones.
Mid-Range Smartphones May Also Be Affected
AI is no longer limited to expensive smartphones; it has also entered mid-range phones. Phones priced between ₹20,000 and ₹30,000 are now offering features like generative AI. Chipset companies like MediaTek and Qualcomm are continuously working in this direction. However, experts say that if the cost of these phones also increases, the burden will directly fall on the customers, which could affect sales in this category.
Customers Will Be the Most Affected
If prices increase, the most affected will be customers who buy a new phone every year or two. The smartphone market in India is already a bit sluggish. In such a situation, if prices rise, a large number of people may either postpone their purchases or look for cheaper alternatives.
Companies Are Trying to Reduce Costs
Thomas CH, Senior Director at MediaTek, has acknowledged that costs are increasing to deliver better performance in smartphones. However, he also said that customers are willing to pay more for premium features. Companies are trying their best to control costs so that prices do not increase too much.
Those Buying Premium Phones Will Have to Spend More
People who want to buy smartphones above ₹30,000 may have to pay even more in the future. Due to AI features, these phones are being equipped with new processors, larger RAM, and more storage, which is making them more expensive. If customers want a smartphone with the latest features, they may have to loosen their pockets more than before.
Dollar-Rupee Movement Is Also a Reason
Not only technical reasons but also economic factors are affecting smartphone prices. According to Upasana Joshi, Research Manager at International Data Corporation (IDC), the position of the rupee against the dollar is also affecting chipset prices. When the rupee weakens, the prices of chipsets and other essential parts increase, which directly affects the manufacturing cost.
Smartphone Market in India Is Already Sluggish
Smartphone sales in India have not seen much growth in recent times. There is already competition in the budget phone category, and customers' wallets are feeling the impact. In such a situation, if prices increase further, the market may weaken further. If flagship, mid-range, and low-cost phones also become expensive, the average consumer will have to think twice before making a new purchase.
