Few things to know about India’s memory chip shortage
| AUTHOR | Arindam Goswami |
| DATE | November 13, 2026 |
| CATEGORIES | High Tech Geopolitics AI Memory Chips |
Lava is going to be raising its phone prices by as much as Rs. 3000 from 15th November as it can’t get enough memory chips. Phone makers are the first to feel the pinch as they use such a large amount of memory in each handset. The same type of chip is used by the makers of electric scooters and electric cars and they also buy it from the same small number of suppliers. One can go through the customs records of India, Korea and China and find four things. The Indian importers paid around four times as much for memory in August as they did in January. They buy a significant proportion of their memory from China and the actual proportion is probably higher than the Indian records would suggest. India’s only memory plant is the one that exports its output. EV makers can of course protect themselves if they change the way they buy memory.
The companies that run the AI data centres are the ones that created the shortage in the first place. Initially they were buying a particular type of memory that the phone and car makers aren’t using. They’re now also buying the standard memory. A computer that’s running an AI model has to store every single conversation as it’s happening and a single long conversation with a large model can be as much as 33GB as per some estimates. Users of AI agents will have such conversations open for hours. TrendForce reported that the chipmakers have effectively doubled their contract prices for standard memory in the first quarter of this year.
Indian importers paid $462m for memory in January this year and $1956m in August (DGCI&S trade data). They paid that much because the prices had gone up. Korean customs data bears this out. Korean firms took in 5.7x as much from DRAM exports in July 2026 as they did in July 2025 and shipped a little less by weight. Korean prices also rose substantially faster than India’s import bill. Some of the memory that India is importing is of a different type and will have different prices. India’s importers may also be getting fewer chips, or some of them may still be on old contracts.
Indian importers currently get about 41% of their memory from China. The obvious assumption would be that importers turned to Chinese suppliers when prices went up. That’s not the case. Importers have been taking a larger share from China year on year for several years now, irrespective of whether prices were up or down. It was the Korean suppliers who took the share when prices went up. So India will continue to rely on China for memory even when prices come down.
India’s numbers and China’s numbers don’t match. Korean customs officials counted pretty much the same amount of memory going to India as the Indian officials counted coming in from Korea. The two figures are within 3% of each other. The Chinese numbers were 32% higher than the Indian numbers. Importers normally report a higher value than exporters as they’ll include freight in their figures, so the Chinese figure is quite surprising. There may be some Chinese memory being shipped to India via another country and the Indian customs may be recording that under that country of origin. Indian records still have an eighth of their memory imports coming from Hong Kong. One can’t actually confirm that from the records. The difference could simply be down to timing or product classification.
Micron opened its packaging plant at Sanand in February. The plant at Sanand takes the wafers that Micron manufactures in its overseas fabs and finishes them, and that output is then exported. From January to August the value of memory exported was about 2% of the value of memory imported. There is no public document to suggest that the government asked Micron to keep any share for Indian buyers.
Three companies account for approximately 88% of the memory that carmakers use. Takshashila researchers have written about technology denial regimes and refer to a situation such as this as a “fragile bloc” where a few suppliers are in control without any formal co-operation. A new supplier can undermine that control. There’s no government that has ordered this shortage so the analogy is only approximate. The new supplier in this case is China’s CXMT. However, CXMT is reportedly currently selling the majority of its chips to Chinese customers.
What can India do in this situation to deal with this shortage? EV makers (and indeed start-ups in general) should pool their orders through an industry body. A chipmaker will be much more likely to sign a supply contract for a pooled order than for individual orders. The buyers should agree on a price band linked to a public index as prices could fall post 2027 when the chipmakers open up new fabs. The government should require any packaging plant that is taking incentives to offer a portion of its output to Indian buyers first. The vehicle designers should switch over to the new LPDDR5 memory prior to 2028. S&P expects chipmakers to continue to make the older chips only until the end of 2027. The government should also publish a report on memory imports every 6 months and look at the divergence from the Chinese numbers.