Smartphones will become expensive in 2026, prices will increase due to memory chip shortage

The Indian smartphone market may face challenges in 2026. Memory chip shortage could increase prices by up to 40%. Entry level phones will be most affected, while the premium segment will be less affected.

New Delhi: India’s smartphone market may face challenges on both the demand and shipment fronts in 2026. Due to the continuous shortage of memory chips globally, chip prices are expected to increase by up to 40 percent by the June quarter this year. This increase will directly impact smartphone prices and companies may be forced to pass on the cost increase to customers.

memory chip shortage

Tarun Pathak, director of Counterpoint Research, says that based on his revised estimates, this decline could be quite serious in the coming year. He said the shipment volumes of entry-level smartphones, which are priced around Rs 10,000, may decline by more than 15 per cent next year. This segment contributes 18 percent to the total volume in the smartphone market. Overall, an average decrease of 3 to 5 percent may be seen in all categories.

The share of memory chip in the total cost of a smartphone is 12 to 16 percent. Due to this, the pressure of price increase will mostly fall on mid-range and entry-level smartphones. Its impact on high-end premium phones will be relatively less. This decline is also a matter of concern because volume shipments of smartphones have been almost stable for the last two years.

Market performance to 2025

Smartphone shipments in India are estimated to be around 153 million units in the year 2025, which is almost equal to that of 2024. In value terms, the smartphone market registered a growth of 9 percent, mainly due to the growing trend towards the premium segment and increase in average selling price.

But Tarun Pathak says that prices are likely to increase by 5 to 9 percent in 2026, which will not be due to the increasing trend towards premium but due to increase in production costs.

Preparation of companies

Mobile companies are accepting this challenge. Sudhin Mathur, chief operating officer, Xiaomi India, said, “We may have to increase prices and most companies have already done so. It is not possible to fully absorb the rapidly increasing cost of memory.” He also said that its impact on customers purchasing phones through EMI will be limited.

“The memory shortage will persist throughout the year as existing capacity is being used up by AI data centers and new capacity will take time to come in,” says a senior executive at a major EMS company that supplies to big brands.

A senior Lava India official also said that the memory chip shortage will lead to an increase in phone prices, especially in the entry-level smartphone segment. He called this the biggest challenge for 2026.

Impact of cost increase on customers

Experts believe that due to the increased prices of memory chips, companies will have to face a cost increase of 8 to 15 percent. It will be mandatory to pass the burden of this increase on the customers, which may affect the overall demand for smartphones. Entry-level phones, which have higher sales volumes, will be hit the hardest.

Global causes and memory shortage

There is a global shortage of memory chips due to many reasons. The main reasons are the increasing demand for AI and data centres, limited production capacity and time taken to set up a new factory. Due to this, the prices of memory chips are likely to continue rising.

Experts say that in this situation cost control and pricing strategy will be important for smartphone manufacturing companies. Companies will have to decide to what extent they should increase prices when production costs increase so that the impact on demand is minimized.

Long term impact in smartphone market

If memory chip prices remain high, the decline in total smartphone market shipments could be prolonged. This situation will most affect the entry-level phone segment, which is important in terms of volume in the Indian market.

Its impact on the premium segment will be relatively less because price sensitivity is less there. However, overall, the growth rate of smartphone sales in India may remain slow next year.