The smartphone market in Indonesia is experiencing a significant trend shift. Devices in the one million IDR price range are becoming increasingly difficult to find in retail stores. This phenomenon is not merely a local trend, but a reflection of a global industry strategy that is beginning to abandon the ultra-low-cost device segment to maintain business sustainability.
The main pressure faced by manufacturers stems from rising component costs, particularly memory chips. As artificial intelligence (AI) technology development expands globally, memory production capacity is being prioritized for that sector, directly driving up component purchase prices for phone vendors. For the entry-level segment, which has thin profit margins, this increase in production costs has become an unavoidable burden.
Data from Counterpoint Research highlights that devices priced below US$150, or around IDR 2.7 million, are the hardest-hit segment. Beyond component costs, demands for feature innovation, operating system update support, and more robust security aspects are forcing manufacturers to shift their business focus to mid-range devices. This segment is considered more profitable while providing greater room for technological innovation.
This landscape change brings a direct impact on consumers in Indonesia. People are now faced with increasingly limited choices when looking for new budget-friendly phones. As a result, many users choose to delay purchasing new devices, hold onto their old phones longer, or switch to the second-hand market to get better specifications on a limited budget.
Although options will become more selective, industry experts believe that cheap phones will not completely disappear due to the public's high need for digital access. However, consumers are required to be wiser in setting their priorities. Moving forward, the industry is predicted to continue raising average selling prices for devices to balance innovation demands, production cost efficiency, and market expectations.
