As memory chip prices continue to rise, the affordable smartphone market is facing significant challenges, particularly in 2026. This surge in prices for DRAM and NAND chips is making it increasingly difficult for manufacturers to keep their devices competitively priced. As a result, many are starting to shift their focus away from budget-friendly models.
Decline in Shipments of Budget Smartphones
Market research firm Omdia predicts a substantial drop in the shipment of smartphones priced under $400, estimating a decrease of over 22% globally in 2026 compared to the previous year. This trend is primarily attributed to the soaring costs of memory components, which have greatly inflated production expenses for lower-end devices.
Manufacturers Adjusting Strategies
According to Omdia analyst Zaker Li, the pressure on the budget smartphone segment is expected to persist for several quarters, as memory prices show no signs of declining. Manufacturers like Transsion, Oppo, Vivo, Honor, and Xiaomi have begun raising prices on some of their models in an effort to maintain profit margins. However, this approach carries the risk of dampening demand, as consumers in the budget segment are typically more sensitive to price increases.
Impact of Rising Memory Costs
Omdia's analysis shows that the surge in DRAM and NAND prices has drastically altered the cost structure of smartphone production. By Q1 2026, memory costs accounted for approximately 59% of the total production costs for smartphones priced under $400. In contrast, this figure was around 31-32% in Q3 2025. For devices costing less than $99, memory costs constituted an even more staggering 64% of the total production costs.
Trends in the Global Smartphone Market
Overall, Omdia forecasts that the global smartphone market will shrink by about 12% in 2026, primarily due to weakened demand for budget smartphones. Conversely, shipments of smartphones priced above $400 are expected to grow by around 5.7%. This shift reflects a strategic pivot by manufacturers towards developing mid-range and premium devices, as consumers in these segments are generally more willing to accept price hikes.
To mitigate production costs, vendors are attempting to cut expenses on components such as display panels, camera sensors, and radio frequency modules. However, these cost-cutting measures are becoming increasingly difficult to implement in the budget segment, where profit margins are already razor-thin. Manufacturers still have some flexibility with premium devices, allowing them to incorporate features like LTPS OLED panels in place of LTPO or utilize smaller camera sensors without significantly impacting the product's appeal.
Source: https://tekno.kompas.com/read/2026/07/14/19020007/harga-memori-makin-mahal-hp-murah-bakal-makin-jarang-di-pasaran
