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Memory Chip Shortage Forces Indian Electronics Makers to Slash Output 10-20%
Surging memory chip prices—up 4-5x in recent quarters—are forcing Indian OEMs and EMS firms to cut production volumes by 10-20%. Smartphones, PCs, and servers face the steepest impact as manufacturers pivot to premium products to protect margins.
A severe memory chip shortage is hammering India's electronics manufacturing sector, with original equipment manufacturers (OEMs) and electronics manufacturing services (EMS) firms slashing output by 10-20% for the remainder of the year. Memory chip prices have surged four to five times over the past few quarters, squeezing production of entry-level devices across smartphones, televisions, servers, set-top boxes, and routers.
Mobile phones will bear the brunt, followed by personal computers, servers, and set-top boxes. Even automotive-grade memory components are facing supply constraints. Counterpoint Research estimates overall production volumes will decline 10-15% across consumer electronics categories, with manufacturing taking an equivalent hit.
Rather than halting production outright, manufacturers are shifting strategy. OEMs are redirecting capacity toward premium products with higher average selling prices to preserve margins. This "survival of the premium" approach involves configuration adjustments, tighter cost controls, and strategic price increases to offset shrinking profitability, according to Ashok Chandak, president of the Indian Electronics and Semiconductor Association (IESA).
The supply crunch underscores India's vulnerability in the semiconductor value chain, particularly as the country aims to scale domestic electronics production. With memory chips critical to virtually all modern devices, the shortage threatens to slow momentum in a sector that has seen significant policy support and investment in recent years.
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