AI chip demand triggers smartphone price surge in India

The volatility stems from a fundamental shift in semiconductor production. Samsung, SK Hynix, and Micron are aggressively reallocating capacity toward the specialized memory required for AI accelerators, which offer significantly higher profit margins than standard phone components. For India, where roughly 60% of smartphone sales occur in the sub-₹20,000 segment, this supply-side pivot has triggered price hikes between 4% and 68% depending on the model.

Counterpoint Research notes that the pain is concentrated at the entry level, with shipments in the sub-₹15,000 segment collapsing by 45% year-over-year. While premium brands like Apple and Samsung retain a measure of insulation, thanks to financing options and less price-sensitive buyers, lower-tier manufacturers are struggling to maintain profitability. OnePlus, for instance, has begun narrowing its global footprint to protect margins, while the broader market faces a transition from volume-driven growth to a value-based model.

Analysts warn that this environment will likely persist. Kiranjeet Kaur of IDC suggests that memory shortages and elevated pricing may remain the status quo until 2027. Combined with a weakening currency that inflates the cost of imported components, the market is bracing for a prolonged period of stagnant shipments as replacement cycles stretch toward four years.