The cheapest smartphones are heading into a difficult period, and the pressure is coming from an unusual place: memory chips. IDC warns that the sharp rise in demand from artificial intelligence is tightening supply of DRAM, pushing costs higher and threatening the low-end phone segment first.
That shift matters most for buyers who have long relied on entry-level devices as the most affordable way to get online. IDC expects the global smartphone market to fall 13% in 2026, calling it the largest decline in the industry’s history.
AI is reshaping memory allocation
The main problem is not a weak market alone, but a structural change in where memory chips go. DRAM is increasingly being absorbed by AI systems that need large memory capacity to train models and run services in data centers.
As a result, supply that once flowed more freely to phones and laptops is now being diverted to large language model development. IDC sees this as more than a temporary disruption, because the competition for memory has become part of a broader shift in the global tech industry.
Chipmakers are responding in a straightforward way. Samsung and SK Hynix are said to prefer supplying memory to AI companies because that segment pays far more than smartphone makers can afford to match.
Low-end phones are losing room to grow
The first signs are already visible in budget devices that used to sell below Rp 2 juta. Two years ago, this tier could still offer 4 GB to 6 GB of RAM, 64 GB to 128 GB of storage, and HD+ to Full HD screens.
That profile is changing fast. New phones in the lowest price range now average only 2 GB to 3 GB of RAM and 32 GB of storage.
The downgrade does not stop at memory. Processing speeds become slower, camera quality is reduced, and supporting features are often trimmed so manufacturers can keep prices as low as possible.
Prices are rising while choices narrow
For buyers who want the same level of specification that was common in 2024, the price is now around 30% to 40% higher. IDC also sees signs that within the next 12 months, new smartphones priced below Rp 1.5 million could disappear entirely from official product catalogs.
That would be a serious change for consumers in developing markets, where affordable smartphones have served as the main gateway to internet access. The segment is becoming harder to maintain just as it remains one of the most important for first-time users.
The slowdown is also expected to hit Africa and the Middle East especially hard. In those two regions, smartphone shipments are projected to drop by more than 20%.
Why supply cannot be fixed quickly
The memory shortage is not something the industry can easily solve in the short term. Building a modern DRAM factory requires massive investment, with costs estimated at US$15 billion to US$20 billion, before equipment and research expenses are even counted.
Those barriers help explain why many companies stay away from the sector. The business has a long history of tough competition, and major names such as Intel, Texas Instruments, and IBM once tried before leaving it.
Qimonda and Elpida also failed to survive in the market. At the same time, DRAM development is becoming more difficult because the technology is approaching the physical limits of how memory components can store power.
For as long as AI customers are willing to pay premium prices, DRAM prices are likely to remain elevated. That leaves low-cost phones under the greatest strain, especially in countries where affordable devices still drive the growth of new internet users.
Source: selular.id
