HMD Warns AI Supply Disruption Could Last Through 2027

The smartphone industry is entering a period where buying decisions may be shaped less by megapixel counts, benchmark scores and flashy specifications and more by a simpler question: how much Technology do people actually need?

That shift is becoming particularly important as smartphone manufacturers deal with a new wave of disruption caused by the rapid expansion of Artificial Intelligence Infrastructure. HMD, the company that sells Smartphones under the HMD name and feature phones under the Nokia brand, expects the supply-chain pressure affecting key components to continue well into 2027.

Ravi Kunwar, Vice-President and Chief Executive Officer, India and APAC at HMD, says the current disruption is broader than a conventional smartphone component shortage. The growth of AI data centres is increasing demand for memory and other technology components, while chipset availability, display supply and geopolitical issues are adding further pressure.

For smartphone buyers, the consequences could include higher component costs, tighter availability and a market that is less focused on delivering ever-increasing specifications at increasingly aggressive prices.

AI Boom Is Creating New Pressure on Smartphone Supply Chains

The global AI race is changing the economics of the technology industry. The infrastructure required to run services such as ChatGPT and Claude depends on enormous quantities of advanced computing resources, including memory and semiconductors.

That demand is increasingly competing for resources that are also important to consumer electronics manufacturers.

“AI is disrupting the whole world, not only just one device,” Kunwar says, pointing to shortages involving memory, chipsets and even LCD displays. He also highlights geopolitical developments and logistics challenges as additional factors affecting the availability of components.

The impact is already being felt in the smartphone market. India’s smartphone market is projected to decline by around 5 to 10 per cent this year to approximately 130 million units, according to the figures cited in the discussion.

A weaker market combined with higher component costs creates a difficult equation for manufacturers. Brands must decide whether to absorb higher costs, increase prices, reduce specifications or find other ways to protect margins.

For HMD, the bigger concern is that the disruption may not be temporary.

HMD Expects the Component Crisis to Continue Through 2027

When asked whether the supply-chain situation could stabilise in the coming months, Kunwar offered a relatively long timeline.

“Answer is no, in this cycle. My own estimate is it’s going to be there in 2027,” he says.

That assessment means smartphone manufacturers may have to plan around elevated uncertainty rather than treating the current situation as a short-lived interruption.

Memory is particularly important because it is used across virtually every modern smartphone. Higher demand from AI infrastructure can affect the broader availability and pricing of memory components, eventually influencing the cost structure of consumer devices.

The problem does not stop with memory. HMD’s assessment also points to pressure involving chipsets and display panels, while geopolitical tensions can complicate transportation and supply routes.

For consumers, that could make the traditional smartphone upgrade cycle less attractive. If component costs rise, manufacturers may have less room to offer major hardware improvements without increasing prices.

Consumers Are Showing Signs of Smartphone Fatigue

While manufacturers are dealing with supply-chain disruption, HMD believes another major change is taking place on the consumer side.

After years of rapid smartphone development, buyers may be becoming less interested in chasing every new specification. Kunwar describes this as a form of digital fatigue, arguing that consumers are increasingly looking for a healthier balance between technology and everyday life.

“What I observe today, there is a digital fatigue, and people need a digital detox,” Kunwar says.

His argument is not that consumers can simply abandon smartphones. Modern Banking, communication, navigation, entertainment, work and other daily activities increasingly depend on them.

Instead, the question is whether consumers are becoming more selective about how much technology they purchase and use.

“Can you live without your smartphone today? The answer is no. Your life revolves around that. But is there an overdose of it? The answer is also yes. So, what’s the right balance?” he asks.

The Smartphone Spec War May Be Losing Its Appeal

The smartphone industry spent years competing on increasingly visible hardware specifications. More megapixels, faster processors, larger displays, more RAM and higher refresh rates became important marketing tools.

Kunwar describes this period as a specification race that emerged as smartphones became mainstream.

“Fifteen or twenty years back, when smartphones were coming in, it was a race where everyone wanted to be ahead,” he says. “That led to a spec war ‘my megapixel is better than yours.’”

HMD believes consumers are now becoming more conscious of whether those upgrades actually make a meaningful difference in everyday use.

Kunwar gives the example of choosing a phone with a 50-megapixel camera that remains secure and useful for two or three years instead of paying significantly more for a 200-megapixel camera that a buyer may never fully use.

The underlying idea is that consumers are beginning to evaluate phones based on practical ownership rather than specification sheets alone.

Battery life, software support, security, reliability and durability can therefore become just as important as camera resolution or processing performance.

HMD’s Vibe 2 Pro Targets Value-Conscious Indian Buyers

HMD is positioning its latest smartphone around this value-focused environment with the launch of the Vibe 2 Pro 5G in India.

The phone starts at Rs 15,999 for the variant with 6GB of RAM and 128GB of storage. A higher version with 8GB of RAM is priced at Rs 17,999.

The Vibe 2 Pro comes with a 6,000mAh battery, a 120Hz Full HD display, 33W fast charging and a MediaTek Dimensity 6300 chipset.

On paper, the combination places the phone in a competitive part of India’s smartphone market, particularly for buyers looking for everyday performance and battery life without moving into significantly more expensive price segments.

The large battery is particularly relevant to HMD’s argument about practical features. Instead of focusing exclusively on headline-grabbing specifications, the company is emphasising features that can have a direct impact on daily usage.

The pricing also comes at a time when component shortages are making aggressive value positioning more difficult for smartphone manufacturers.

How HMD Says It Can Keep Prices Competitive

The obvious question is how HMD can maintain relatively aggressive pricing while the industry faces higher component costs.

Kunwar attributes part of the answer to the company’s operational structure. HMD does not carry the same level of fixed-cost baggage associated with some legacy Business models, allowing it to adjust more quickly when market conditions change.

“In the short term, the agility is what I would say, because we do not have baggage, per se, in terms of having a very high fixed cost,” Kunwar says.

HMD still has a substantial offline distribution network in India. The company works with around 1,000 distributors and reaches approximately 100,000 retailers each month.

At the same time, it has experimented with newer retail channels. HMD became the first brand to sell a feature phone, the Nokia 105, through quick-commerce platform Blinkit.

This combination of traditional retail and newer digital distribution gives the company multiple ways to reach consumers as purchasing behaviour continues to change.

HMD Sees Local AI as Key to India’s Next Phase of Adoption

AI is not only creating supply-chain problems for smartphone manufacturers. It is also becoming an important part of the future smartphone experience.

Major smartphone platforms are increasingly integrating AI assistants and generative AI features. Google has Gemini, apple is developing AI capabilities around Siri, and Samsung has integrated AI services into its smartphone ecosystem.

HMD is taking a different route by focusing on the importance of local context.

The company has partnered with Sarvam AI, an Indian startup working on generative AI models, with the aim of making AI more relevant to India’s linguistic and cultural diversity.

For HMD, simply making an AI model available in India is not necessarily enough. The company argues that AI needs to understand how people actually communicate and live outside India’s largest metropolitan areas.

“You have a Digital India, and you have a digital economy. That will never gain traction unless Digital India becomes a Digital Bharat,” Kunwar says.

He points to the difference between users in major cities and those in smaller Tier 3 towns. The challenge, in HMD’s view, is to make AI useful for people whose languages, dialects and cultural contexts may not be adequately represented by technology designed around global or urban usage patterns.

AI Needs to Become a Habit, Not Another Complicated Feature

HMD believes the next stage of AI adoption will depend on removing barriers rather than simply adding more features to smartphones.

“Unless AI becomes a habit, change will not come. And for that habit to come, you need to remove the barriers,” Kunwar says.

That is where HMD sees potential in locally relevant AI systems. The company’s argument extends beyond translation or language support. It includes understanding local dialects, cultural references and the context in which people communicate.

If successful, such systems could make AI interactions feel less like operating a complicated technology product and more like using an everyday digital service.

That approach also reflects the broader shift HMD sees in the smartphone market. Consumers may not necessarily want more technology simply for the sake of having more technology. They may want technology that fits naturally into their existing lives.

HMD’s Nokia Connection Remains Important

HMD’s strategy is also closely connected to the legacy of Nokia, a brand that continues to carry significant recognition among Indian consumers.

Kunwar’s own career with the Nokia brand spans nearly 25 years, including periods covering the Nokia-Microsoft transition and the later HMD phase.

According to Kunwar, the Nokia name continues to create an emotional connection with consumers and can help open the door for HMD products.

But that familiarity also creates expectations. Once consumers see HMD instead of Nokia on a smartphone, the company has to establish what the new brand represents.

“Nokia legacy is still loved. It still draws emotion. It helps you open the door,” Kunwar says. “The challenge comes the moment you change the name at the back, and then people say, ‘Okay, we know this, but what about this?’”

HMD’s answer is to focus on trust rather than attempting to become the loudest player in the smartphone market.

From More Specifications to More Meaningful Features

HMD’s positioning comes at an interesting point for the smartphone industry. Manufacturers are simultaneously trying to introduce increasingly sophisticated AI capabilities while dealing with higher demand for the underlying infrastructure that powers modern computing.

At the same time, consumers may be reaching the limits of what conventional hardware upgrades can deliver as meaningful improvements in everyday life.

That combination could push the industry towards a different kind of competition. Instead of simply adding another camera or increasing a specification number, manufacturers may need to demonstrate why a feature matters and how long a device can remain useful.

Kunwar says this philosophy is central to HMD’s approach.

“We don’t want to be the loudest brand on this planet. We want to be the most trusted one, which is what Nokia stood for,” he says.

That does not mean specifications will stop mattering. Battery capacity, display refresh rates, processors, memory and cameras will continue to influence smartphone buying decisions. But the balance between those specifications and practical ownership could change.

For consumers, the emerging question may therefore be less about whether a phone has the biggest number on its specification sheet and more about whether those specifications solve a genuine problem.

What the 2027 Outlook Could Mean for Smartphone Buyers

If HMD’s assessment of component shortages extending into 2027 proves accurate, smartphone manufacturers could spend the next several product cycles operating under tighter supply and cost constraints.

That could affect pricing, launch strategies and the specifications available at different price points.

For buyers, it may reinforce a trend that HMD is already seeing: purchasing a phone for longevity rather than simply upgrading because a newer model offers a larger number.

The Vibe 2 Pro reflects that approach in a straightforward way. A large battery, high-refresh-rate display, fast charging and adequate memory and storage are features that directly affect everyday use, while the company’s AI strategy focuses on making digital tools more locally relevant.

The smartphone market is therefore facing two seemingly opposite forces. AI is pushing technology towards greater complexity and computational demand, while consumers may be looking for simplicity, durability and a more conscious relationship with their devices.

HMD’s bet is that the companies able to navigate both trends will be the ones that understand not only what technology can do, but also what consumers actually need from it.