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Will increasing the storage capacity of 16GB iPhone SE 1st Gen to 32GB affect the performance or battery life in any negative way? Can it lead to unexpected shutdowns? I was planning to increase the storage to 32GB since 16Gb is too less for me.

Hello, Kunal. While upgrading storage does not typically cause issues, in an iPhone it can definitely have unwanted consequences. Upgrading iPhone storage is a complex and lengthy procedure so it is not recommended especially for beginners.