Why are smartphone prices touching the sky? Understand whether mobiles will become more expensive in future due to these 5 reasons

In the last few months, there has been a huge jump in the price of almost every smartphone from budget to premium segment. The reason for phones becoming expensive is not just general inflation, but the increasing interference of Artificial Intelligence (AI), expensive memory chips and increase in manufacturing costs.

If you are also planning to buy a new phone and are worried about the rising prices, then let us understand from the perspective of a tech and business analyst the 5 biggest reasons for smartphones becoming expensive.

5 main reasons why smartphones become expensive

1. Memory chips becoming expensive due to AI

The demand for AI data centers and servers is increasing rapidly around the world.

• Chip making companies are now focusing more on manufacturing chips used for AI rather than smartphones.

• Due to this, the cost of RAM and storage of smartphones has increased by 2 to 3 times. Earlier the share of memory in the total cost of the phone used to be 10-15%, which has now increased to 30-40%.

2. On-device AI and advanced hardware

Nowadays, every new phone is coming with on-device AI features, high-end cameras and more RAM. To run these advanced features smoothly, powerful processors and expensive hardware are required, which directly increases the production expenses of companies.

3. Weak rupee and supply chain pressure

Many important components of smartphones are still imported.

• The weakness of the Indian rupee against the US dollar has significantly increased the import cost.

• Along with this, pressure on the global supply chain and increase in logistics (transportation) expenses have also forced companies to increase prices.

4. The biggest impact on the budget smartphone market

The biggest hit due to rising costs has been on budget smartphones priced below Rs 15,000.

• According to Counterpoint Research, there has been a huge decline of 45% in the sales of this budget segment on an annual basis.

• All India Mobile Retailers Association also says that due to expensive phones, retail sales have slowed down considerably.

5. Will phones become more expensive in future?

According to industry experts, at present there is no hope for the common man to get relief from the prices of mobile phones.

• Due to shortage of chips and increasing demand for AI servers, components may remain expensive in future.

• To balance the costs, companies are now taking steps like removing chargers from phone boxes, re-emphasizing 4G models and giving finance/EMI offers to customers.

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