India's mid-range smartphone market may face price pressure in the coming months. Devices in the Rs 20,000 to Rs 50,000 range could become more expensive or ship with less RAM (Random Access Memory).
The reason lies in the global demand for memory chips used to power AI systems.
What Is The “AI Tax”?
The “AI Tax” is not a real government tax. It is an informal term used to describe the extra cost consumers may end up paying because of the global AI boom.
AI companies are building large data centres to train and run artificial intelligence models. These systems require huge amounts of computing power and memory chips.
As a result, the supply of memory available for consumer electronics is becoming tighter. When component prices increase, device manufacturers often pass some of the cost to buyers.
Why Memory Chips Are In Short Supply
AI systems utilise a specialised type of memory known as High-Bandwidth Memory (HBM). It is designed for very high-speed data processing used in AI servers.
That said, producing HBM requires the same wafer manufacturing capacity used to produce DRAM, a type of memory commonly used in smartphones, laptops, and PCs. Because demand for AI infrastructure is rising quickly, chip manufacturers are allocating more production capacity to HBM.
The global memory market is dominated by three companies: Samsung, SK Hynix and Micron. Reports indicate that much of their HBM production capacity for 2026 has already been booked by AI companies building data centres.
This has reduced the supply of DRAM available for consumer devices.
How This Affects Smartphones
When memory becomes more expensive or harder to obtain, smartphone makers have two options: increase prices or adjust specifications. In many cases, companies may try to keep the price similar while reducing hardware.
Example:
- A phone expected to launch with 16GB RAM may ship with 12GB RAM.
- Higher storage or RAM variants may become more expensive.
- Entry-level models may gradually move to higher price points.
Industry estimates suggest that consumer electronics prices could rise between 5 per cent and 20 per cent if memory shortages continue.
Several technology brands have already launched new devices at slightly higher prices compared to their previous models.
Expanding memory production takes time. Building new semiconductor factories can take two to three years. The shortage of memory chips may continue until 2027, as demand from AI data centres continues to grow.
During this period, prices of laptops, PCs, smartphones and gaming consoles may remain higher than before.
Phones That Have Become More Expensive In 2026
Samsung Galaxy S26 series
- Galaxy S26 Ultra starts at Rs 1,39,999, up from Rs 1,29,999 for the Galaxy S25 Ultra.
- Galaxy S26+ starts at Rs 1,19,999, compared with Rs 99,999 for the Galaxy S25+.
- Galaxy S26 starts at Rs 87,999, up from Rs 80,999 for the Galaxy S25.
Nothing Phone 4a series
- Nothing Phone 4a starts at Rs 31,999, while the Phone 3a launched at Rs 22,999.
- Nothing Phone 4a Pro starts at Rs 39,999, compared with Rs 27,999 for the Phone 3a Pro.
Not all brands raised prices. Apple iPhone 17e starts at Rs 64,900, the same price as the previous iPhone 16e variant with similar storage. Google Pixel 10a launched at Rs 49,999, unchanged from the Pixel 9a.
