Rising Component Costs Threaten India’s Entry-Level 5G Smartphone Segment: Report

Rising Component Costs Threaten India’s Entry-Level 5G Smartphones: Report
Higher component costs are threatening to slow the rapid expansion of India’s entry-level 5G smartphone market, raising concerns about affordability and subscriber growth, industry executives and analysts said, according to a report by The Economic Times dated November 25, 2025.

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Memory Prices Surge, Eating into Margins

Rising memory prices have emerged as the biggest pressure point, with memory now expected to account for as much as 48 percent of total component costs, up from 20–35 percent earlier. The surge follows a global shift in production toward high-bandwidth memory used in AI data centres. Most smartphone brands have already increased prices of budget 5G models by Rs 1,000–2,000 to offset the higher costs.

Manufacturers Scale Back Production

“Top handset manufacturers are looking to either reduce their footprint in the segment or exit altogether as higher costs of components used in entry-level smartphones are eroding gross margins,” unnamed Industry executives were quoted as saying in the report.

Entry-Level 5G Market Growth Faces Headwinds

Shrinking margins have prompted several top handset makers to scale back their presence in the sub-Rs 10,000 5G segment, while some are considering exiting the category altogether. Original design manufacturers Huaqin and Longcheer—key suppliers for major Android brands—have cut production in India by 30–40 percent, citing both post-festive season demand correction and rising component costs.

“Huaqin and Longcheer, which supply entry-level handsets to top Android brands, have sharply reduced their supplies from October, which is partly due to the festive season coming to an end, but also due to higher component costs which cannot justify such low end-prices,” an executive was quoted as saying.

Future Cost Trends and DRAM Price Hikes