The smartphone industry is facing significant challenges as the prices of DRAM and NAND memory chips continue to rise, putting immense pressure on the budget smartphone segment in 2026. This situation is leading manufacturers to struggle with maintaining the sale prices of their devices, prompting a shift in focus away from this segment.
Decline in Budget Smartphone Shipments
Market research firm Omdia has projected a decline of over 22 percent in the global shipment of smartphones priced below $400 (approximately Rp 7.1 million) in 2026 compared to the previous year. The primary driver behind this decline is the sharp increase in memory prices, which has escalated production costs, particularly for entry-level devices.
Continued Pressure on Manufacturers
According to analyst Zaker Li from Omdia, the pressure on the budget smartphone segment is expected to persist over the coming quarters, as memory prices show no signs of decreasing. The report indicates that low-cost products are increasingly difficult to profit from, leading vendors to gradually withdraw from this market segment throughout the year.
Impact on Production Costs
As production costs rise, several manufacturers, including Transsion, Oppo, Vivo, Honor, and Xiaomi, have begun to raise prices on some of their models to maintain profit margins. However, this strategy carries the risk of diminishing demand, as consumers in the budget smartphone market are typically more sensitive to price increases.
Changing Cost Structures
Omdia notes that the surge in DRAM and NAND prices has significantly altered the production cost structure for smartphones. In the first quarter of 2026, memory costs accounted for approximately 59 percent of the total bill of materials (BOM) for smartphones priced below $400, and even reached 64 percent for devices under $99. This is a substantial increase from the 31-32 percent contribution seen in the third quarter of 2025.
Premium smartphones are also experiencing cost increases; the contribution of memory costs for devices priced above $800 (around Rp 14.3 million) has risen from about 11 percent to 26 percent. However, the impact is more pronounced in the entry-level segment, where there is limited room to reduce costs in other components.
To mitigate production expenses, vendors are attempting to cut costs on components such as display panels, camera sensors, and radio frequency (RF) modules. Nonetheless, this strategy is becoming increasingly difficult to implement in the budget smartphone sector due to its already tight cost structure.
Overall Market Outlook
Overall, Omdia forecasts that the global smartphone market will shrink by around 12 percent in 2026, primarily driven by waning demand in the budget segment. Conversely, shipments of smartphones priced above $400 are expected to grow by approximately 5.7 percent. This trend reflects a strategic shift among manufacturers towards developing mid-range and premium smartphones, as consumers in these segments are perceived to be more capable of absorbing price hikes.
Additionally, manufacturers still have some options to reduce production costs for premium devices, such as using LTPS OLED panels instead of LTPO for certain models, employing smaller camera sensors, or utilizing older-generation chipsets without significantly compromising product appeal.
Source: https://tekno.kompas.com/read/2026/07/14/19020007/harga-memori-makin-mahal-segmen-hp-ini-kian-tertekan
