In the last few months, the prices of phones of almost every segment, from budget to premium, have increased. The reason for this is not only inflation, but also AI features, expensive memory chips, new processors and increasing manufacturing costs. In such a situation, the question is why the prices of smartphones are not stopping and will we have to spend more money to buy new phones in the future? Understand in 5 points.
1. Memory chips become expensive because of AI
Today, AI data centers and servers are growing rapidly around the world. For this reason, memory chip manufacturing companies are now paying more attention to chips used for AI rather than smartphones. This has had a direct impact on the price of mobile RAM and storage. According to the report, earlier the share of memory in the total cost of a smartphone was 10 to 15 percent, but now it has increased to 30 to 40 percent. That means the cost of memory has increased by 2 to 3 times. This is the reason why 256 GB variants are less visible in budget phones in the market and even if they are there, their price is 4 to 5 thousand more than the 128 GB variant.
2. On-device AI and new hardware increased expenses
Now almost every new smartphone is coming with on-device AI features, better camera and more RAM. To run these features, a powerful processor and expensive hardware is required. This is the reason why the production expenses of companies are continuously increasing and its effect is directly visible on the price of the phone.
3. Weakness of rupee and supply chain also became the reason.
Importing not only chips but also components has become more expensive than before. Import costs have increased due to the weakness of the rupee against the US dollar. Along with this, pressure on the global supply chain and increase in logistics expenses have further increased the costs of companies. This is the reason why companies are being forced to increase prices.
4. Most impact on budget smartphone market
The biggest impact of rising prices has been on smartphones priced below Rs 15,000. According to Counterpoint Research, there has been a decline of 45 percent in the sales of this segment on an annual basis. At the same time, the average selling price of smartphones in India is also continuously increasing. According to All India Mobile Retailers Association, retail sales have also slowed down due to expensive phones.
5. Will smartphones become more expensive in future?
Industry experts believe that at present there is little possibility of relief in prices. Counterpoint Research and IDC estimate that components may remain expensive due to the shortage of memory chips and increasing demand for AI servers. This is why companies are taking steps like removing these box chargers, emphasizing on 4G models and increasing finance offers to reduce costs. If the situation does not change, smartphone prices may increase further in the future.
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