Affordable 5G Smartphones Set to Get Costlier as Component Prices Surge

India’s budget 5G smartphone market is bracing for a fresh wave of price hikes as the cost of key components continues to climb. Leading brands including Realme, Oppo, Xiaomi, Samsung and Lava are expected to raise prices of their entry-level 5G models, making the latest wireless technology more expensive for common users.

According to The Economic Times, industry executives and market analysts warn that the rising cost of components could slow the rapid growth of India’s entry-level 5G smartphone segment. This may hurt affordability, slow subscriber additions, and eventually impact telecom companies’ revenue.

Profit Margins Shrinking for Smartphone Makers

The sharp increase in input costs is forcing several top manufacturers to reconsider their presence in the low-budget 5G segment. Executives say that margins have shrunk significantly, prompting some companies to scale down operations or even exit this category altogether.

Memory Costs Skyrocket to 48% of Total Component Cost

A major concern is the unprecedented rise in memory prices. Reports suggest that memory could account for up to 48% of the total component cost, compared to the earlier 20–35%. This surge is driven by global chipmakers shifting production towards high-bandwidth memory (HBM) to meet rising demand from AI data centres.

Over the past few weeks, most smartphone brands have already increased prices of their budget models by ₹1,000–₹2,000, passing the additional burden on to consumers.

Production Slashed by Key Chinese ODMs

Entry-level 5G phones in India are largely manufactured by Original Design Manufacturers (ODMs) such as China-based Huaqin and Longcheer. Industry insiders reveal that both companies have cut production by 30–40% since October. The slowdown is partly due to the end of the festive season, but primarily because of soaring component prices that make low-cost manufacturing difficult.

Component Prices to Rise Further

TrendForce, a global component industry tracker, estimates that DRAM memory module contract prices will rise by over 75% year-on-year in the December quarter. It also forecasts an additional 5–7% increase in the total Bill of Materials (BOM) cost for 2025, or possibly even higher.

With rising costs, shrinking margins and declining affordability, India’s dream of mass-scale 5G adoption may soon face significant hurdles.