New Delhi: Smartphone makers are facing a shortage of critical components such as memory chips and storage due to suppliers diverting capacities to fulfil booming demand for AI hardware, prompting some firms to increase prices, particularly of entry-level handsets.
A weaker rupee is also adding to the sourcing issues for brands, industry executives and market trackers said.
Manufacturers said they are only importing as much chips as needed to keep material costs from rising too much amid a sharp price increase and supply shortage as suppliers divert capacities to cater to demand from AI data centres.
Some brands have started hiking handset prices, while others are holding back for now, even as retailers said higher prices may hurt sales that have started trending downwards after a festive-season spurt.
"In view of ongoing global supply and demand shifts, the prices of chips and memory components have been steadily increasing since August 2025," Chinese smartphone brand Oppo wrote to retailers in an official memorandum communicating price hikes.
Oppo has hiked prices by as much as ₹2,000 across most of its high-end and mid-range models.
Rivals Vivo and Samsung also have also raised prices of some of their models.
Xiaomi is holding on to its price tags this month despite "an industry-wide surge in memory costs" triggered by the AI demand, a company spokesperson said, adding that the firm is "closely tracking these market shifts."
The Chinese brand is expected to relent to pricing pressure next year with its new model. "As input cost pressures continue, the industry may witness broader price revisions in 2026," the spokesperson told ET.
An executive from a top smartphone assembler in India who did not wish to be named said its customers are finding it difficult to source memory chips, especially for entry-level smartphones, which rely on older generation chips.
"We just came out of a stellar festive season with some left-over inventory of components, which we are using to keep prices stable in the short-run," the executive said. "However, the next batch will be sourced at a higher price, which may be passed on to the customers."
A weaker rupee has also made importing components more expensive, the executive said.
Besides chips, other critical components such as the processor are also expected to face inflationary pricing trends next year, experts said.
According to industry trackers, major foundries are raising wafer prices, driven largely by increasing chip complexities and strong demand from sectors like AI and high-performance computing.
This would impact chip production costs for the likes of Apple, MediaTek, Qualcomm and Nvidia, industry research firm Trendforce. "The driving forces behind this pricing shift are TSMC's escalating manufacturing expenses, particularly its massive investments in Arizona, as well as unrivalled dominance in the global foundry market," it said.
But price hikes may hit smartphone sales.
"We are already seeing sales dropping dramatically," said Kailash Lakhyani, chairman of All India Mobile Retailers Association (AIMRA) which represents over 150,000 mobile phone retailers in India. "Sales are now comparable to September month and going forward, we are expecting a further drop in sales."
Francis Wong, head of product marketing at Realme said, "Memory and storage costs are not moving in the same cycles we knew before. The AI revolution has rewritten the rules, creating massive demand for high-end memory that fuels data centres and machine learning systems. The same chips once used in smartphones are now heavily pulled toward powering generative AI models, leaving the industry to rethink how we build, price, and innovate devices."
( Originally published on Nov 06, 2025 )
A weaker rupee is also adding to the sourcing issues for brands, industry executives and market trackers said.
Manufacturers said they are only importing as much chips as needed to keep material costs from rising too much amid a sharp price increase and supply shortage as suppliers divert capacities to cater to demand from AI data centres.
Some brands have started hiking handset prices, while others are holding back for now, even as retailers said higher prices may hurt sales that have started trending downwards after a festive-season spurt.
"In view of ongoing global supply and demand shifts, the prices of chips and memory components have been steadily increasing since August 2025," Chinese smartphone brand Oppo wrote to retailers in an official memorandum communicating price hikes.
Oppo has hiked prices by as much as ₹2,000 across most of its high-end and mid-range models.
Rivals Vivo and Samsung also have also raised prices of some of their models.
Xiaomi is holding on to its price tags this month despite "an industry-wide surge in memory costs" triggered by the AI demand, a company spokesperson said, adding that the firm is "closely tracking these market shifts."
The Chinese brand is expected to relent to pricing pressure next year with its new model. "As input cost pressures continue, the industry may witness broader price revisions in 2026," the spokesperson told ET.
An executive from a top smartphone assembler in India who did not wish to be named said its customers are finding it difficult to source memory chips, especially for entry-level smartphones, which rely on older generation chips.
"We just came out of a stellar festive season with some left-over inventory of components, which we are using to keep prices stable in the short-run," the executive said. "However, the next batch will be sourced at a higher price, which may be passed on to the customers."
A weaker rupee has also made importing components more expensive, the executive said.
Besides chips, other critical components such as the processor are also expected to face inflationary pricing trends next year, experts said.
According to industry trackers, major foundries are raising wafer prices, driven largely by increasing chip complexities and strong demand from sectors like AI and high-performance computing.
This would impact chip production costs for the likes of Apple, MediaTek, Qualcomm and Nvidia, industry research firm Trendforce. "The driving forces behind this pricing shift are TSMC's escalating manufacturing expenses, particularly its massive investments in Arizona, as well as unrivalled dominance in the global foundry market," it said.
But price hikes may hit smartphone sales.
"We are already seeing sales dropping dramatically," said Kailash Lakhyani, chairman of All India Mobile Retailers Association (AIMRA) which represents over 150,000 mobile phone retailers in India. "Sales are now comparable to September month and going forward, we are expecting a further drop in sales."
Francis Wong, head of product marketing at Realme said, "Memory and storage costs are not moving in the same cycles we knew before. The AI revolution has rewritten the rules, creating massive demand for high-end memory that fuels data centres and machine learning systems. The same chips once used in smartphones are now heavily pulled toward powering generative AI models, leaving the industry to rethink how we build, price, and innovate devices."
( Originally published on Nov 06, 2025 )
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