iPhone's surprise price twist for old models exposes smartphone price pain

Buying last year’s iPhone has long been the cheaper way to enter into Apple’s ecosystem.

A new model would arrive, and its predecessor would slide down the price ladder. Consumers unwilling to pay for the latest camera, processor or design could simply wait for a new launch.

This year, Apple flipped that equation.


After the launch of the iPhone 18 series, the tech giant raised prices of older iPhones in India instead of cutting them. The iPhone 17 has moved from Rs 82,900 to Rs 99,900, the iPhone 17e from Rs 64,900 to Rs 79,900 and the iPhone Air from Rs 1,19,900 to Rs 1,49,900.

The surprise is not that the latest iPhone is expensive. It is that phones which were expected to become the more affordable alternatives have become costlier.

The reversal is also a window into a larger shift in the global electronics business. A scramble for memory chips, driven by the AI data-centre boom, is pushing up component costs and forcing consumer electronics makers to rethink an assumption that had held for years: older technology gets cheaper.

Also read: Apple’s pricing gap takes a bite out of iPhone sales outlook in India

Why are older iPhones getting more expensive in 2026?

Apple's pricing ladder has historically worked in a fairly predictable way. Each new iPhone launch created a fresh premium tier while the previous generation became the lower-priced entry point.

That pattern had become particularly important in India, where local manufacturing helped Apple hold prices steady across several generations. The iPhone 12 launched at Rs 79,900 in 2020, while the iPhone 13, iPhone 14, iPhone 15 and iPhone 16 followed at the same starting price, according to pricing data cited in a Times of India report.

The latest reset breaks that rhythm.

Instead of allowing the iPhone 17 and other existing models to absorb the role of cheaper alternatives, Apple has raised their prices. For a consumer accustomed to waiting for the annual launch cycle to get a better deal, waiting has produced the opposite result.

The cheapest new iPhone available today is also significantly more expensive than the entry-level model was around 18 months ago.

The question is why.

Tim Cook had warned that prices would rise

Former Apple Chief Executive Officer Tim Cook had signalled months earlier that the company was facing a component-cost problem it could no longer fully absorb.

In a June interview with The Wall Street Journal, Cook said price increases had become “unavoidable” because of surging costs for memory and storage chips.

“We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable,” Cook told the Journal.

The pressure comes from a part of the semiconductor industry that has suddenly become central to the AI boom: memory.

According to Deloitte's July report, AI data centres require several types of memory, including high-bandwidth memory, high-capacity DRAM and enterprise solid-state drives. At the same time, memory vendors are increasingly reallocating standard DRAM and NAND capacity towards AI data-centre products such as HBM and enterprise SSDs.

That is changing the economics for everyone using ‘memory’.

Cook described the current spike as unprecedented in his four decades in the electronics supply chain.

“This is a hundred-year flood,” he told the Wall Street Journal. “I’ve never seen anything like it in any area in over 40 years.”

Also read: iPhone Duo at Rs 2,99,900: Why Apple’s first foldable costs more in India

AI is reshaping the memory market

The semiconductor industry is not facing a broad collapse in supply. It is facing a sharp shift in where capacity, investment and profits are going.

In February, Deloitte expected global semiconductor sales to reach $975 billion in 2026, driven largely by the AI infrastructure buildout. But that growth is heavily concentrated. High-value AI chips are expected to account for roughly half of semiconductor revenue despite representing only a tiny fraction of overall chip volumes.

Memory is increasingly being pulled into that same high-value cycle.

Deloitte said strong demand for HBM and other AI-focused memory products has contributed to shortages of consumer memory, including DDR4 and DDR5.

For consumer electronics makers, the problem is not simply that memory has become more expensive. It is that the companies competing for those components are now up against an AI industry willing to spend unprecedented sums on data centres.

Deloitte's July report said AI-driven demand had pushed memory chip prices to unprecedented levels in 2026. It warned that consumers and enterprises could feel the effects through higher prices for products ranging from PCs and smartphones to telecommunications equipment.

And relief may not come quickly.

Even as memory makers increase capital expenditure, new capacity is not expected to immediately ease supply because building and scaling memory fabrication facilities can take three to five years, according to Deloitte.

The firm said the current supply tightness and elevated prices could persist until 2029 or even 2030 if demand from hyperscalers remains strong.

Apple may be the clearest sign of a wider smartphone problem

Apple's decision to raise prices on older models is particularly striking because of the company's position at the premium end of the smartphone market.

But the underlying cost pressure is not limited to Apple.

Deloitte has warned that rising memory prices are beginning to affect demand expectations for consumer devices. Its semiconductor outlook said personal computing devices and smartphone sales, which had previously been expected to grow, were now expected to decline in 2026 because of higher memory prices.

That presents smartphone makers with an uncomfortable choice.

They can absorb higher component costs and take a hit on margins. They can pass those costs on to consumers. Or they can try to protect prices by making compromises elsewhere.

Apple has more room than most to navigate that trade-off. Its premium customer base, financing options and trade-in programmes can soften the impact of a higher price.

For lower-margin smartphone brands, the choices could be tougher.

The old smartphone model, better specifications for the same price every year, depends on component costs remaining manageable. If memory remains expensive, the pressure could eventually show up in higher prices, slower upgrades or less aggressive specifications.

Apple's old-iPhone price increase, therefore, is less important as an isolated pricing decision than as an early sign of what a changed component cycle can do to consumer electronics.

Apple iPhone price hike in India explained: Another layer to the price pain

The global memory squeeze does not operate in isolation in India.

Currency movements, taxes and import costs can amplify the price impact of globally sourced components. According to a Times of India report, taxes and import-related costs help explain part of the difference between prices in India and the US, particularly for products that are not locally assembled.

But taxes do not explain every increase in older iPhone prices.

The report pointed to other factors, including currency movements, channel economics and Apple's assessment of the Indian premium consumer market. The percentage increases across models have also varied, suggesting that component inflation is only one part of the final pricing decision.

That distinction matters. The memory crunch helps explain why maintaining the old pricing ladder has become more difficult. It does not establish that every rupee increase on an iPhone can be traced directly to a memory chip.

Apple is making a commercial decision in a changed cost environment.

For Indian consumers, however, the result is simpler: the cheaper route into the iPhone ecosystem is no longer as cheap.

The pain does not stop at smartphones

The supply-chain shift is also bigger than consumer electronics.

Memory and storage components are used across a range of industries, including automobiles. The Wall Street Journal noted that the chips caught in the current memory squeeze are used in products ranging from smartphones and laptops to cars.

Deloitte, meanwhile, has identified automotive among the major non-data-centre markets experiencing relatively slower growth as AI chips absorb an increasingly large share of semiconductor industry value and investment.

The implication is not that every car is about to become more expensive because of AI memory.

The bigger risk is a shift in semiconductor economics.

As AI infrastructure becomes the industry's most lucrative customer, manufacturers of smartphones, PCs, vehicles and other electronics-intensive products are competing for components in a market where consumer demand is no longer the biggest prize.

The previous global chip shortage showed how even relatively small semiconductor bottlenecks could disrupt automobile production.

This time, the pressure is different.

The world is not merely short of chips. The economics of the chip industry are being reshaped by a buyer willing to spend far more for the capacity it needs.

For years, technology buyers could rely on a basic rule: wait, and yesterday's device will cost less. Apple's latest price reset suggests that rule is becoming harder to count on. The iPhone 18 may be new. But the bigger surprise is what happened to the phones that came before it.