Buying new phone? AI boom could make your smartphone prices more expensive: Here's why

The global race to build advanced artificial intelligence systems is creating an unexpected ripple effect in the consumer electronics market. As tech giants invest heavily in AI data centres and large language models, demand for high-performance memory chips has surged. Manufacturers are increasingly prioritising AI-focused memory production over components used in smartphones, laptops and tablets. While consumers may not notice immediate changes, industry experts warn that this shift could reshape the availability and pricing of everyday gadgets in the years ahead.

Memory chips are a critical component in nearly every modern electronic device, from smartphones to laptops and smart TVs. Industry leaders say supplies of LPDDR4 memory, commonly used in consumer electronics, could tighten as manufacturers redirect capacity towards AI servers. Rather than immediately raising prices, brands may respond by reducing promotional offers, delaying product upgrades or adjusting device specifications. The result could be fewer choices and slower innovation, even if retail prices remain relatively stable in the short term.

The issue is particularly important for India, where the consumer electronics market is expected to surpass $120 billion by 2030. Demand from tier-2 and tier-3 cities continues to fuel growth in smartphones, laptops and connected devices. At the same time, consumers expect more storage, better performance and longer-lasting products. If memory shortages persist, electronics companies may face increasing difficulty balancing affordability with technological improvements, potentially affecting the pace at which new features reach the mass market.

The consequences of memory shortages extend far beyond consumer gadgets. Semiconductors power a vast range of products, including automobiles, healthcare equipment and industrial machinery. When supplies become constrained, manufacturers face higher production costs and longer delivery timelines. Industry executives say the current situation reflects a broader structural challenge rather than a temporary supply chain disruption. As AI demand continues to expand, multiple sectors could experience mounting pressure to secure access to critical semiconductor components.

Despite the challenges, industry leaders view the situation as an opportunity to strengthen supply chains and reduce vulnerabilities. Companies are expanding supplier networks, improving demand forecasting and maintaining larger inventory reserves. Governments, including India, are also encouraging semiconductor manufacturing to reduce dependence on imports. Experts believe greater collaboration between chipmakers, policymakers and technology firms will be essential to meeting future demand. While consumers are unlikely to see immediate shortages, the industry is quietly preparing for a more competitive semiconductor landscape.