Rising memory prices fuel India's smartphone affordability crunch: Lava

Lava's Sumit Singh says memory shortages and AI-led demand are reshaping smartphone pricing, while the company focuses on clean software, local manufacturing and AI features

As India’s smartphone market navigates rising component costs, supply constraints, and a renewed push for domestic manufacturing, companies are being forced to rethink both pricing strategies and product positioning. At the same time, shifts in consumer expectations, from price sensitivity to demand for quality and longevity, are reshaping how brands approach the entry-level and mid-range segments.

 

Lava International, one of the few remaining Indian smartphone brands, has been positioning itself around value-focused devices, clean software, and local manufacturing. The company has also begun integrating artificial intelligence (AI) features into its devices while expanding into wearables and strengthening its presence in feature phones.

 

In an interaction with Business Standard, Sumit Singh, senior vice-president and head of product at Lava International, spoke about the company’s strategy across segments, the impact of rising memory costs, its approach to localisation, and how it is building AI-led experiences into its smartphones. Edited excerpts:

How would you explain what Lava is doing right now in India and what it plans to do going forward in terms of devices?

 

Currently, Lava operates across smartphones, feature phones, and smart wearables, which we recently entered. In feature phones, we are the second-largest player in terms of market share in India.

 

In smartphones, we focus on products priced below $300. A large part of our portfolio is in the entry-level segment, including both 4G and entry-level 5G models.

 

Then we move into the mid-segment, where we launch differentiated products with features such as curved displays and dual displays.

 

We also try to bring the latest technologies into value-focused products. For example, we are launching a product with DDR5 RAM in the sub-$200 segment, which is quite unique.

 

We focus heavily on performance and try to use the latest chipsets so that the longevity of the product remains sustainable.

 

Last year, we launched a product with the MediaTek Dimensity 6400 chipset, which was first in the segment. We also launched the world’s first smartphone with the Dimensity 7060 chipset. That is how we are positioning ourselves in the smartphone space.

 

What is Lava’s approach to customer experience?

 

We have an overarching focus on customer experience across everything we do. In feature phones, for example, all our devices focus on strong build quality. We also run a unique programme called OTCR — Over the Counter Replacement.

 

This means if a customer purchases any Lava feature phone and faces a problem within the first year, they can go to any retail outlet selling Lava phones. The retailer inspects the device and provides a replacement immediately. There is no need for repair or a visit to a service centre.

 

That reflects the level of customer centricity we aim for.

 

Similarly, in smartphones, customer experience remains the top priority. We have made a few commitments to customers and the market.

 

For example, we do not include bloatware applications in any of our smartphones. This means customers do not lose storage space to unwanted apps.

 

Many brands pre-install applications to generate revenue, but we avoid that approach. There are long-term benefits as well. One is privacy, because many third-party applications collect user data. The second is performance, since these apps can slow devices over time and consume additional storage.

 

We have also committed to longer software support depending on the segment, including Android upgrades and security patches.

 

Additionally, we stay connected with customers by gathering feedback at intervals of 30 days, 90 days, 180 days, and 360 days after purchase. Based on this feedback, we continue releasing software optimisations over time.

 

We also follow a service-at-home approach. Customers can raise issues through WhatsApp, the built-in Lava app, or a toll-free number, and a service representative visits the customer’s home or office to resolve the issue.

 

That is how we try to deliver the best customer experience.

 

We are seeing memory price increases, shortages, and chip constraints due to global factors. How will Lava continue offering value, and will this impact software commitments like updates and a bloatware-free experience?

 

This memory crisis is likely to continue till the end of 2027. Memory production capacity remains limited, and global smartphone demand has not increased significantly over the past three years after Covid. Growth has largely remained in single digits, so memory vendors focused more on efficiency improvements rather than capacity expansion.

 

Now, after the introduction of AI, companies are building very large data centres. A significant portion of memory supply is being diverted towards AI companies and servers.

 

At the same time, fabs cannot be developed quickly. It takes at least two years for production to begin. So this situation is likely to continue.

 

Because of the shortage, memory costs have increased sharply. Earlier, memory accounted for around 15–20 per cent of the bill of materials. Now it is closer to 50 per cent.

Our strategy is simple — we focus on the consumer. Prices are increasing, so prices will have to rise to some extent, but we want to remain competitive with Chinese and global brands. At the same time, because we are an Indian brand, we understand consumer requirements in detail across different segments — below $100, $100–150, $150–200, and above $200.

 

This helps us optimise configurations rather than simply raising prices without changes.

 

Our core commitments — zero bloatware, long-term software support, and service at home — will remain intact. These are non-negotiable.

 

Is the cost impact more prominent in certain segments, and how will this affect pricing across entry-level and premium smartphones?

 

Memory pricing works per GB. In premium segments, storage variants are higher, so the impact is also greater.

 

For example, the increase in cost for a 4GB model will be lower compared to an 8GB model because every additional GB carries the price increase. Earlier, below $100 was largely a 4G market. Between $100 and $150, there was a mix of 4G and 5G devices, while above $150 was mostly 5G.

 

Now the scenario is changing. Below $120 will largely remain 4G. Between $120 and $150 will continue to have a mix of 4G and 5G, while above $150 will remain predominantly 5G. The challenge is stronger in higher segments.

 

Earlier, users could get MediaTek Dimensity 7000 series chipsets, Antutu scores between 800,000 and one million, and 8GB RAM with 256GB storage in the $150–200 range.

 

Now users may have to settle for Dimensity 6000 series chipsets and 6GB RAM with 128GB storage in the same category.

 

So products will still exist, but with lower specifications.

 

In lower segments, supply issues are becoming more visible.

 

Earlier, users could buy a 5G phone in the Rs 8,000–10,000 range. Now, 5G smartphones are largely unavailable in that bracket. Consumers may need to spend above Rs 12,000 for a 5G device. Similarly, it is becoming harder to find basic smartphones in the Rs 6,000–7,000 range.

 

Will manufacturing more components in India help reduce smartphone costs, and how much of Lava’s production is end-to-end manufacturing versus assembly in India?

 

Lava does end-to-end manufacturing in India. There are multiple ways companies make smartphones in India. One is CBU, where finished products are imported and sold directly.

 

The second is assembly, where key components such as PCBAs, displays, and housings are imported and assembled locally. The third is the SMT (Surface Mount Technology) process, where companies procure components like capacitors and resistors, build the PCBA, complete EBOM (Engineering Bill of Materials) and MBOM (Manufacturing Bill of Materials) stages, and then conduct final assembly, testing, and sales.

 

We follow this full process across our products.

 

In terms of localisation, India still trails China’s ecosystem. EBOM components are sourced from China, Hong Kong, Taiwan, and other regions.

However, localisation is improving gradually. Housing parts are local, batteries are local, chargers are now developed in-house, and cables and other components are also increasingly being localised.

 

In the long run, localisation should improve cost efficiency because labour, electricity, and land costs in India are more economical than China.

 

On the software side, are you building AI features on top of Android, and how dependent is Lava on Google for its AI services?

 

You should look at our device launched last year — the Agni 4. It includes an interactive AI pet.

 

You can ask it to book a cab on Uber, navigate using natural prompts like “mere ko airport le chalo”, tell jokes, and perform multiple tasks. It supports Hindi, English, and regional languages.

 

There are also expert AI systems. When users double-tap, they access specialised AI agents such as a math teacher, English teacher, male companion, female companion, and horoscope assistant.

 

This is unique and not widely available in competing brands.

 

The reason we can do this is because we are not dependent only on Google. Our AI system interacts with multiple large language models (LLMs) at the backend. It takes inputs from multiple models and generates outputs accordingly.

 

For example, queries for expert AI systems are routed to specialised LLMs. If users scan a complex math problem, the system provides structured, step-by-step solutions.

 

That is how we have built the system — by mapping queries across multiple LLMs to improve precision.

 

We started this last year, and going forward, these AI features will expand across mid-range and flagship 5G devices.

 

The system can also perform device-level actions. Users can say “turn on the flashlight”, “open the camera”, or “take a selfie”, and it executes the command.

 

It also understands intent rather than relying on exact phrasing.

 

We are now working on more advanced versions. By the end of this year, we expect to introduce more personalised AI experiences that can adapt based on user behaviour and preferences.

 

How much of this AI experience is on-device versus cloud-based, and are there any data privacy concerns?

 

There are no major data-related concerns because we have formal agreements with backend providers. These are paid services, not free integrations. We use a hybrid approach — combining on-device AI with cloud AI — similar to most devices offering AI features today.

 

On-device AI handles optimisations such as camera processing, power management, and background app control. However, this depends heavily on hardware capabilities.

 

Earlier there was CPU, then GPU. Now, AI requires NPUs — Neural Processing Units.

 

Currently, advanced NPUs are mostly available in premium chipsets such as Qualcomm’s Snapdragon 8 series and MediaTek’s Dimensity 8400 and 9000 series.

 

So on-device AI will become more effective as NPUs become more widely available.

 

We are also working on building more native AI applications. Next year, we expect to bring more AI processing directly onto devices.

 

Are you planning to optimise AI for lower-end devices or bring AI features to that segment?

 

Yes, definitely. As I mentioned, AI features with expert AI systems will come to mid-range and flagship devices, likely starting from the $150 segment. At the same time, we are planning AI features for entry-level 4G devices as well.

 

The needs of first-time smartphone users are very different. They may not be comfortable with complex AI systems, so AI needs to be intuitive and easy to use while still delivering useful functionality.

 

We are working on simplifying these experiences in a way that genuinely adds value for such users.

 

Anything to summarise?

 

Indian brands now have a strong opportunity because a lot of consolidation has already taken place.

 

Earlier, there was an intense price war, and many Indian brands disappeared because they focused too heavily on reducing prices at the cost of quality and customer experience.

 

Now, customers are prioritising quality over price.

 

We have focused on customer experience and customer centricity over the past three years, and we are seeing good growth because of that. I believe Indian brands that focus on customer experience can make a strong comeback in the coming years.