AI Tax On Your Next Upgrade: Why India’s Smartphones Are Quietly Getting Pricier

Why Your Next Phone Costs More

Retail data shows that over 80 of roughly 200 smartphone models in India have seen average price hikes of about 15%, with projections of another similar increase in the coming quarter. Entry-level 5G phones that were under ₹10,000 around last Diwali now sell closer to ₹13,000–14,000, and some popular mid-range devices have become up to 40% more expensive.

The “AI Tax” And Memory Shock

The biggest villain is inside the phone: memory. Global prices of DRAM and NAND flash which handle multitasking and storage have surged 50–90% year-on-year as chipmakers divert capacity to high-bandwidth memory used in AI data centres for companies like Nvidia and others. With memory now making up 30–40% of a phone’s bill of materials, brands from Samsung and Xiaomi to Oppo, Vivo and Realme are passing these increases straight to Indian consumers. Industry executives dub this the “AI tax” on smartphones.

Rupee, Freight And Brand Strategies

The pain is amplified by rupee depreciation, higher freight costs linked to global conflicts, and a broader semiconductor supply squeeze. While some brands have formally raised MRPs by ₹1,000–₹3,500, others like Apple have simply rolled back discounts of ₹5,000–₹6,000 on recent iPhone models, effectively increasing street prices.

What It Means For Indian Buyers

For consumers, the biggest shock is in the ₹15,000–₹25,000 “value” segment, where phones once priced at ₹18,000–₹20,000 now hover nearer ₹25,000. Many buyers are postponing upgrades, opting to repair existing phones or stretching device lifecycles to three to four years rather than two. Budget 5G options are shrinking, and analysts warn that truly affordable new launches may remain rare until memory prices stabilise, likely only after 2026.

Smart Shopper Insights

• Over 80 smartphone models in India have seen average price hikes of ~15%
• Entry-level 5G phones have moved from under ₹10,000 to around ₹13,000–₹14,000
• DRAM and NAND prices have surged 50–90% as chipmakers prioritise AI memory demand
• Mid-range phones are up to 40% costlier; ₹18,000–₹20,000 devices now near ₹25,000
• Consumers are delaying upgrades and repairing older phones as prices keep rising

Sources: NDTV, The Times Of India