Smartphones and PCs could become 5–10% more expensive over the next 12–18 months as artificial intelligence (AI)-driven demand for advanced memory chips continues to tighten supply.
According to the India Electronics and Semiconductor Association’s (IESA) estimates, some consumer electronics categories could see price increases of 10–15%, depending on memory requirements, as manufacturers increasingly prioritise high-margin memory products used in AI infrastructure.
“Data-centre demand for HBM and advanced DRAM is absorbing capacity that earlier served consumer electronics, pushing memory prices up 30–50% and, in some cases, even higher,” Ashok Chandak, President of IESA, said.
High-Margin HBM
High bandwidth memory (HBM), a key component used in AI accelerators and graphics processing units (GPU), has emerged as one of the fastest-growing segments in the semiconductor market. Compared with conventional DRAM and NAND flash memory used in smartphones and PCs, HBM requires greater manufacturing resources and offers higher returns to memory makers.
As AI infrastructure investments accelerate globally, memory manufacturers are increasingly reallocating fabrication capacity towards AI-focused products, reducing supply available for traditional electronics markets.
Industry estimates suggest prices across several memory categories have risen between 50% and 100% over the past year. However, the increase in device prices is expected to be lower because memory accounts for only a portion of the total cost of a smartphone or PC, with processors, displays and other components continuing to make up a larger share of device costs.
“The current tightness is AI-led and structural, not just a normal semiconductor cycle,” Chandak said.
Mass-Market Affordability
The pressure is expected to be more visible in mass-market products where pricing flexibility is lower and shipment volumes remain high. Industry executives said entry-level smartphones could face greater pressure as manufacturers attempt to balance component inflation with affordability concerns.
The trend is already beginning to reflect in the market. Counterpoint Research earlier said more than 80 smartphone models recorded average price increases of nearly 15%, while another 15–20% increase could occur in subsequent quarters.
“The market is facing a clear affordability squeeze, driven by sharp memory-led cost inflation and currency pressures that have forced OEMs to raise prices across key models,” Prachir Singh, senior analyst at Counterpoint Research, said.
While MeitY Secretary S Krishnan earlier described rising memory prices as part of the semiconductor industry’s cyclical nature, industry executives argue that the current shift differs from previous cycles because AI-related demand is changing how manufacturing capacity is being allocated.
Relief is unlikely to come quickly. Building new memory fabrication capacity typically takes two to three years, limiting near-term supply additions.
“Relief is unlikely to be immediate. Given current AI infrastructure investments, tightness may continue through 2026 and into 2027, with gradual normalisation thereafter,” Chandak said.