AI data center demand pushes up phone memory costs in India

In short: India is seeing a sharper smartphone slowdown as memory chips get more expensive due to demand from AI data centers.

What's going on

India’s smartphone shipments fell 10% year over year in the April to June quarter, according to Counterpoint Research. That is the steepest decline for that quarter in six years.

A key reason is higher prices tied to memory chips, specifically RAM and storage. These are the parts that help a phone run apps smoothly and save photos and videos. The same kinds of chips are also needed in huge quantities for AI data centers, which are large buildings packed with computers (like warehouses for computing power).

TechCrunch reports that major chip makers have been putting more production toward specialized memory used for AI systems because it brings in more money. That can leave less supply for the standard memory used in phones, which pushes costs up.

India is being hit harder than China, where shipments fell 2% in the same period, Counterpoint said. One reason is that about 60% of India’s smartphone market is under ₹20,000, where even small cost increases can change what people buy. Counterpoint also said shipments in the under ₹15,000 segment fell 45%.

Brands are reacting in different ways. Counterpoint data showed Samsung grew 2% in India in Q2, while Apple fell 3%, which TechCrunch notes was largely linked to supply and inventory constraints.

What to watch

Analysts told TechCrunch that many buyers are likely to keep their phones longer, closer to four years on average. IDC expects the slowdown to continue, and it said higher memory costs and pricing pressure could last until at least the end of 2027.

Source: TechCrunch AI