Daijiworld Media Network - New Delhi
New Delhi, Aug 4: As smartphone prices continue to rise due to increasing component costs, manufacturers are expanding financing options and flexible ownership models to encourage consumers to upgrade without lowering retail prices.
Leading brands such as Samsung and Apple are increasingly relying on longer no-cost equated monthly instalment (EMI) plans, trade-in programmes, buyback schemes and lease-based models to make premium smartphones more affordable amid slowing demand and longer replacement cycles.
Samsung recently introduced a 30-month no-cost EMI option for its latest Galaxy Z 8-series foldables in India, allowing customers to pay in equal monthly instalments without additional interest. Apple, meanwhile, continues to offer bank cashbacks and no-cost EMI options through its online and retail stores in India, while also operating a lease-based upgrade programme in the United States.
Industry analysts attribute the shift to record-high smartphone prices, driven by rising costs of key components such as DRAM and NAND memory chips, along with supply constraints caused by an AI-led surge in demand for semiconductor components.
Techarc Chief Analyst Faisal Kawoosa said premium smartphone prices have reached unprecedented levels, making longer financing tenures increasingly important.
"This is an all-time high. If someone wants to buy such premium and ultra-premium smartphones, they would want the financing tenure to be longer so that the monthly instalment is something they can afford to pay while managing their expenses," he said.
Kawoosa noted that average selling prices and launch prices have increased significantly in recent years, making longer EMI plans a practical solution for consumers. According to him, there are currently 24 smartphone models priced above Rs 1 lakh and more than 40 models in the Rs 50,000 to Rs 1 lakh segment.
He said the combination of higher prices, slower replacement cycles and weakening demand is driving brands to focus on financing instead of discounts.
Research firms have also reported a slowdown in the global smartphone market. Counterpoint Research estimated that worldwide smartphone shipments fell 11 per cent year-on-year during the second quarter of 2026, marking the weakest second-quarter performance since 2013. Omdia estimated a 4 per cent decline, but both firms pointed to consumers holding on to their devices for longer periods.
"The fall in shipments indicates the slowdown in current sales, leading to inventory build-up. This is why original equipment manufacturers are reducing their shipments as they see present sales weakening," Kawoosa said.
He added that Techarc's recent surveys among consumers planning festive-season purchases and smartphone retailers showed that more than half had been affected by rising handset prices.
According to Kawoosa, manufacturers now have limited options to stimulate demand. With discounts becoming increasingly difficult due to higher production costs, extending financing tenures enables consumers to spread the cost over a longer period without reducing product prices.
Beyond EMI schemes, smartphone brands are also expanding ownership models through trade-ins, guaranteed buybacks and certified refurbished devices to encourage customer retention.
Samsung currently offers programmes such as Galaxy Forever and Certified Re-Newed, while Apple continues to strengthen its trade-in, buyback and leasing ecosystem.
Kawoosa said financing currently benefits the premium smartphone segment but is likely to expand to lower price categories as handset prices continue to rise.
"Currently it's Samsung offering 30 months, which will primarily drive premium devices. But as market conditions are changing, where some smartphones are even 60-70 per cent costlier than they were a year ago, the EMI option has to come irrespective of price tiers," he said.
However, he pointed out that financing remains difficult in the sub-Rs 15,000 segment because many buyers lack formal banking histories or credit scores required by lenders.
While flexible ownership models are becoming more common in India, Kawoosa said they have long existed in international markets through telecom contracts, leasing arrangements and bundled mobile plans.
"I would not see Apple or Samsung's move as selling access. They are still selling devices but, yes, enabling affordability," he said.
On retailer stocking decisions, Kawoosa said financing does not determine inventory selection.
"In general trade, which still accounts for the largest share of retailers, they focus on every tier from entry-level to ultra-premium. In modern trade, it's more about mid- to ultra-premium," he said, adding that inventory decisions continue to depend on customer demographics and local demand.
Experts also caution consumers to examine the terms of so-called no-cost EMI offers carefully.
Although marketed as interest-free, financing costs are often absorbed elsewhere through manufacturer incentives to banks, reduced upfront discounts or processing fees. Some offers are also restricted to specific credit cards or eligibility criteria.
"Of course the customer pays. Directly or indirectly, it's the customer who pays. In some schemes the customer pays the finance cost separately, while in others the cost is already built into the instalments," Kawoosa explained.
He added that India has been slower than global markets in adopting bundled smartphone and telecom plans, partly because of previous bad experiences during the CDMA era when operators struggled to recover device costs despite contract agreements.
Although stronger Know Your Customer (KYC) norms have improved customer verification, telecom companies remain cautious due to continuing concerns over digital fraud involving SIM cards obtained through fake identities.
Looking ahead, Kawoosa believes financing could become as important as technological innovation in driving smartphone sales.
However, he warned that longer repayment periods may also encourage consumers to hold on to their devices for longer.
"Most users will not go for another purchase unless their existing EMIs are over. This means upgrade frequency will reduce further. We could see consumers holding on to their smartphones for five to seven years instead of the three-to-five-year cycle that has become the norm," he said.
As smartphone prices continue to climb and competition intensifies, flexible financing is expected to play an increasingly significant role in shaping consumer purchasing decisions and the future of the smartphone market.