As smartphone prices increase due to a glut in demand for memory chips by AI companies and data centres, phone retailers have seen their customer base in India dry up in a significant way. “This is the first time I’m seeing phone prices increase, and continue increasing relentlessly, in the last twenty years,” Vivek Singh, 42, a phone retailer in South Delhi who has been in the business for decades, said at his shop. “I have ten or fifteen people coming into the shop each day, and only one or two buy a phone,” he said.

Since February, phone makers have been sending retailers price hike notifications that have been progressively growing. obtained such notifications from Vivo, Samsung, Realme, Oppo, Nothing, Poco, and Xiaomi from the All India Mobile Retailers Association (AIMRA). Price hikes have ranged from ₹1,000 to ₹5,000, but that is only the latest tranche. “People ask me for ₹10,000 phones, but there is no such thing anymore,” Mr. Singh rued, noting that some budget handsets’ prices have more than doubled. 

The results of these hikes have not been completely doom and gloom just yet, at least not yet. Kailash Lakhyani, AIMRA’s founder chairman, told that retailers were beginning to see better prices for pre-owned phones they got during trade-in purchases, and that retailers who had already purchased stock at an old dealer price were benefiting from a higher margin at newer prices. A review of price-hike notifications showed that some retailers saw their margins jump from 3.85% to over 14% for some Samsung phones.

“60% of phones are being purchased overall,” Mr. Lakhyani claimed. “20% of customers are settling for less powerful phones or buying secondhand, and the 20% of customers below that are waiting for the festival season, hoping for discounts,” he added. “There’s also a rumour of a GST cut for smartphones, so some customers are waiting for that,” Mr. Lakhyani said. The GST for smartphones stands at 18%. 

But this situation may worsen. “We have been in touch with phone companies, and they say this situation may go on till 2028 or even 2030,” Mr. Lakhyani said. “Next year also there will be hikes, but it may be more like a plane rather than a rocket [like this year was],” he added. 

The phenomenon is global, as the memory-chip crunch created by AI demand has hit electronics supply chains across the board. “Global sub-$200 smartphone shipments are forecast to fall about 40% between 2025 and 2030,” Counterpoint Research, a smartphone sales analytics firm, said on Thursday (September 24). Price-sensitive markets like India, Africa, Latin America, and parts of Asia feel this the most, Neil Shah, Counterpoint’s founder, said on X, formerly Twitter. “Connectivity, digital inclusion, and replacement cycles in emerging markets are taking a long-term hit,” Mr. Shah said.