Purchasers of smartphones have been waiting for years. When a phone releases for Rs 29,999, early adopters flock in, while everyone else waits for the inevitable bank deal, festive discount, or price reduction. The same gadget is frequently thousands of rupees less expensive by Diwali.
Maybe that cycle is ending.
The cost of smartphones is not just increasing at debut in 2026. They are rising months after release, remaining high for extended periods of time, and in certain situations, older phones are become more costly over time. According to industry analysts, artificial intelligence is one of the main reasons why the era of predictable smartphone discounts may be over.The memory chips found in ChatGPT, AI servers, and large data centers are now directly competing with those found in regular smartphones. And the AI sector is currently winning that battle.
In a recent Instagram video, Nothing co-founder and India President Akis Evangelidis issued that caution.
According to Evangelidis, the explosive demand from AI infrastructure businesses has caused memory chips, which used to cost smartphone manufacturers about $20 per device, to rise to above $100 in some circumstances. These days, more and more of those chips are being diverted from consumer electronics to AI data centers.
That completely alters the maths for smartphone brands.

In the past, a manufacturer producing a mid-range $400 smartphone might have aimed for a bill of materials of about $200. However, manufacturers have fewer options if one component unexpectedly consumes half of that amount. Either the cost increases or the phone's functionality is compromised.
That's already beginning to occur
The silent degradation occurring within low-cost phones
Many of the "new" low-cost smartphones you see in stores today might not be brand-new.
Brands are increasingly relaunching previous phones under slightly altered names while maintaining the majority of their basic specifications, industry officials told The Economic Times. Some are charging much more for the same processors, camera modules, and designs from earlier versions.In certain instances, companies are even taking a step back.
Another executive in the smartphone manufacturing ecosystem told ET that some low-cost models that formerly supported 5G are now going back to 4G in order to keep costs under control. Others are lowering storage options, lowering camera quality, or making purely cosmetic adjustments like a slightly bigger battery or modified back camera module.
Simply put, component costs have increased to such an extent that many older cellphones can no longer be marketed profitably at their original rates.
More than 130 smartphone models have already suffered price rises in only the last two months, according to Prachir Singh, senior research analyst at the research firm Counterpoint Research. Some handsets have seen multiple price increases in a matter of weeks.Despite just slight improvements, Omdia analysts claim that entry-level gadgets in several areas are now 50–60% more expensive than previous generations.
This implies that consumers may no longer be able to make the conventional assumption that "I'll wait a few months for the price to drop."
High-end phones are still around. The price is being paid by budget buyers.
Not every smartphone manufacturer is equally impacted by the memory shortage.
Due to their reliance on narrow profit margins, brands that rely significantly on low-cost and mid-range phones—such as Xiaomi, Realme, OPPO, Vivo, and Transsion—are most under pressure.

Conversely, premium brands are better protected.
According to reports, long-term supply agreements and larger cash reserves have allowed Apple to maintain comparatively steady prices. Despite the overall slowdown, Apple's revenues increased significantly in Q1 2026, according to Counterpoint Research, thanks to increased demand for high-end models like the iPhone 17 Pro Max.
Samsung Electronics has adopted a different strategy, effectively raising average selling prices without explicitly raising flagship pricing by pushing customers toward greater storage versions and doing away with all less expensive models.

Premium smartphones are becoming more and more important to manufacturers because they provide higher profit margins in times of component scarcity. Higher-end versions frequently have superior hardware and newer chipsets, according to analysts, while lower-end models make concessions.
In other words, innovation is no longer occurring first in the market for reasonably priced smartphones.
So, should you buy now or hold off?
The answer is not universal. However, the outdated reasoning of waiting for unavoidable discounts is starting to lose its credibility.
Six months from now, a phone that was released today might not be significantly less expensive. If component prices keep going up, it can potentially cost more in certain situations.
This does not imply that sales of smartphones will completely stop. Exchange offers, financing choices, cashback programs, and holiday specials will still be provided by brands.

However, the days of sharp price erosion after launch might eventually come to an end, particularly for well-liked mid-range smartphones.
The change may drastically alter customers' purchasing behaviours.
Because the next sale could not save them much at all, customers may need to make decisions based on necessity rather than scheduling purchases around bargains.