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Phone prices could continue to witness increase

ICICIdirect Research 20 Aug 2026 DISCLAIMER

News: Phone prices could continue to witness increase, recently being more on premium phones. Samsung Electronics has raised prices for select advanced contract chipmaking services by up to 15% for new orders, driven by strong AI-chip demand. Prices for its 4nm process have reportedly increased by 10–15%, while 5nm wafer prices rose by ~10–15%; selected 8nm orders have also seen ~10% increases. The hikes are largely targeted at specific high-demand processes rather than being broad-based across all chips. The development could increase manufacturing costs for chip designers and, in the case of smartphone SoCs produced on advanced nodes, potentially add to smartphone BOM and ASP pressure. Dixon, the leading contract manufacturer of Android and laptops, also has Samsung as its client.

View: Samsung’s decision to raise prices for select advanced foundry nodes by up to 15% highlights the tightening supply-demand environment for advanced semiconductor capacity. Flagship smartphones increasingly use 4nm/5nm processors, which can account for ~20%+ of BOM, implying a potential ~1-2% increase in overall smartphone costs if the higher manufacturing costs are fully passed through. A similar impact could be seen in laptops, where processors account for ~15-30% of BOM, particularly in premium and AI-enabled models. Dixon has much higher presence in budget phones and records higher realisation with this price increase while the cost increase is largely pass through with its EBITDA per unit remaining broadly constant. Further, recent independence day sales indicate demand is rebounding though trend needs to be watched out. Besides, Dixon shall benefit from upcoming festive, from low base as last year Q2 had demand deferral owing to GST cut. Overall, Dixon's business to have limited impact of price hike and expect stock to stay in positive traction.

Impact: Neutral

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