AI-led phone price hikes persist, hitting Indian customers

The Indian smartphone market is facing sustained price pressure as manufacturers continue raising handset prices amid a global memory-chip crunch linked to surging artificial intelligence demand, since February, retailers have received repeated price-hike notifications from major smartphone brands, with increases ranging from ₹1,000 to ₹5,000 in the latest round.

The impact is being felt most sharply in the budget segment, where customers have traditionally relied on affordable handsets for everyday connectivity, and retailers say some buyers are now delaying purchases, choosing less powerful models or turning to secondhand phones as prices rise.

Key Highlights

• Several big brands have increased prices of smartphones by ₹1,000 to ₹5,000.

• Budget buyers are delaying purchases or shifting towards less powerful and secondhand phones.

• Global shipments of smartphones priced below $200 are forecast to decline about 40% between 2025 and 2030.

Smartphone price hikes continue across major brands

Price increases have become a recurring feature of the Indian smartphone market since February. Notifications reviewed by The Hindu from Vivo, Samsung, Realme, Oppo, Nothing, POCO and Xiaomi indicated successive increases being communicated to retailers.

According to All India Mobile Retailers Association (AIMRA) representatives, the latest increases are only part of a broader escalation. Some budget smartphones have reportedly seen their prices rise substantially, making entry-level devices increasingly difficult for price-sensitive customers to afford.

The pressure is particularly significant for consumers who typically set budgets around ₹10,000. Retailers have indicated that smartphones once available around those price points are becoming increasingly difficult to find at the same specifications.

Indian buyers change purchasing plans amid rising prices

The continuing price increases are already influencing purchasing behaviour. Kailash Lakhyani, founder chairman of AIMRA, said retailers were seeing customers respond in different ways, including purchasing less powerful smartphones and opting for secondhand devices.

According to Lakhyani's estimate, around 60% of customers are continuing to purchase phones, while 20% are settling for less powerful or pre-owned models. Another 20% are waiting for the festival season in anticipation of discounts.

Some customers are also reportedly waiting amid expectations of a possible GST reduction on smartphones. Smartphones currently attract an 18% GST rate.

For retailers, however, higher handset prices have created some opportunities. Those holding inventory purchased at earlier dealer prices can benefit from improved margins when the same products are sold at newer prices. AIMRA said margins on some Samsung phones had increased from around 3.85% to more than 14%.

AI demand creates wider smartphone supply pressure

The smartphone affordability issue is linked to a broader global electronics supply-chain challenge. Strong demand for AI infrastructure has contributed to pressure on memory-chip supplies, increasing costs for manufacturers and affecting consumer electronics.

Counterpoint Research said global shipments of smartphones priced below $200 are forecast to fall by about 40% between 2025 and 2030. Price-sensitive markets, including India, are expected to experience a significant impact from the shift.

Neil Shah, founder of Counterpoint Research, has highlighted the potential consequences for connectivity, digital inclusion and replacement cycles in emerging markets.

The pressure could also continue beyond 2026. AIMRA has said discussions with phone companies indicate that price increases could persist into 2028 or even 2030, although future increases may be less steep than those seen this year.