Smartphone prices are rising and a big reason is Artificial Intelligence. Experts say flagship phones could cost 10–15% more, with prices going high by early 2026. It’s not just a trend. Hardware, memory and software costs are all increasing to support AI features. Even budget phones are getting more expensive, which could make your next purchase heavier on your wallet.
In India, the average phone price has jumped to around Rs 26,000 (USD 294), the highest increase in nearly five years. New flagship phones like the OnePlus 15 are starting at higher prices than previous models because of AI integration and global chip shortages.
Rising Hardware Costs
One major reason prices are climbing is the processors. AI features need advanced chips built on 3nm and 2nm technology. These “AI-first” chips are far costlier to make, nearly three times more than older processors. Brands like Qualcomm and MediaTek charge more for these high-performance chips to handle AI workloads.
Memory is another factor. AI data centres use a lot of high-bandwidth memory (HBM), causing shortages for the LPDDR5X RAM used in phones. This has pushed memory prices up 20–30%, and manufacturers are passing the extra cost to buyers. Even budget phones are affected, with prices rising around 10% due to legacy memory shortages.
Artificial Intelligence And Software Costs
AI also adds costs through software. Features like real-time translation, smart cameras, and AI assistants need lots of research and development. These investments increase the price of smartphones.
Currency changes make it worse. The Indian Rupee has weakened against the US Dollar, making imported AI chips and memory more expensive. Android brands with smaller profit margins adjust prices quickly, while Apple stays steadier thanks to supply contracts.
To handle higher prices, many Indian buyers are turning to Easy EMIs. This helps make AI phones more affordable, but has also pushed mobile financing delinquency rates to nearly 3%.
In short, Artificial Intelligence is changing smartphones (from smarter features to higher price tags). As AI grows, expect your next phone to be smarter, but also cost more.
