India's entry-level smartphone market is experiencing a significant slowdown as rising component costs, particularly memory prices, make affordable phones increasingly expensive. This was highlighted by analysts and industry executives during a recent panel discussion on smartphone pricing trends.
Key Factors Behind the Slowdown
Executives from research firms such as Counterpoint and IDC, along with smartphone brand representatives, noted that the sub-$100 smartphone category in India has been severely impacted. Brands are struggling with escalating costs of memory, chipsets, and other components. Analysts warned that prices may continue to rise through 2026 and could stabilize only by late 2027 or early 2028.
Memory Prices Emerge as the Biggest Problem
Tarun Pathak, Research Director at Counterpoint, explained that the growing demand for AI servers is affecting global smartphone component supply. Memory manufacturers are prioritizing AI data centers and hyperscalers over smartphone companies, creating shortages and driving prices sharply higher. “A memory that used to cost almost $20 is now $75,” Pathak said during the discussion.
According to Upasana Joshi, Senior Analyst at IDC, memory costs that previously accounted for 10% to 15% of a smartphone’s bill of materials now represent as much as 30% to 40%. She described the India smartphone market as undergoing a “structural reset,” especially at entry-level price points.
Entry-Level Market Sees Steep Decline
IDC reported a major decline in the sub-$100 smartphone category in India as brands move away from low-margin affordable devices. “We call it at IDC as forced premiumization,” Joshi said. “Because at entry level there is no supply of those kind of devices anymore.”
Analysts noted that many consumers who previously purchased phones under ₹10,000 are either delaying upgrades, shifting to second-hand devices, or stretching budgets through EMI schemes to buy higher-priced models. Counterpoint’s Tarun Pathak added that the price gap between feature phones and entry-level smartphones has now reached around ₹4,000, slowing the transition from feature phones to smartphones.
Consumers Confused by Rising Prices
Tech creator Devinder Maheshwari said consumers are struggling to understand why phones with lower specifications are launching at higher prices. “People are confused about this,” Maheshwari said. “The new phones are launching with slightly lesser specs than the previous version, but at the same time they are being priced much, much higher.” He added that many buyers are now spending more money to ensure their next smartphone lasts several years.
Brands Expect Prices to Keep Rising
Francis Wong, a smartphone brand representative, said brands are finding it difficult to absorb rising costs. “I don't think the price will stop rising anytime this year,” Wong said during the discussion. He added that brands are becoming more selective about features and product launches as costs continue to rise. Industry executives also noted that consumers are upgrading phones less frequently and focusing more on long-term experience, battery life, and brand trust rather than just specifications.
