Smartphone sales have started to pick up in India and other markets according to recent reports, but a change in costs of an essential component could lead to prices of smartphones rising again in the coming months. The cost of memory chips used in handsets sold in the country from two component manufacturers is expected to rise, according to a report. The predicted price rise is likely to impact budget 5G smartphones the most, especially those priced under Rs. 10,000.

According to an ET Telecom report citing recent TrendForce data, the prices of smartphones in India could rise in Q2 2024, as both Micron and Samsung are planning to increase the price of their DRAM chips — a smartphone memory component — by up to 20 percent in the current quarter. The increase in costs is expected to translate into higher smartphone prices in the coming quarter, an anonymous industry executive told the publication.

The market research firm’s data reportedly estimates the contract prices of smartphones using the older LPDDR4x technology to rise by up to 8 percent and up to 10 percent for handsets with LPDDR5/ LPDDR5x memory. The report also predicts a shortage of DRAM in the coming months as the hardware is used for other applications like AI.

While this could translate into higher end-prices, recent duty cuts on smartphone components could partially cushion customers from the anticipated increase in prices, according to the report. Manufacturers could also opt to offer lower memory configurations on their upcoming smartphones in order to keep the costs of their phones low.

As per the report, this strategy could benefit budget 5G smartphone makers, who have recently begun to offer higher RAM and storage configurations at lower prices. By choosing to lower their memory configurations, these companies can ensure that the base models of their budget handsets can be purchased under Rs. 10,000.