Cheap Android phones are facing a new squeeze as rising RAM prices begin to distort production costs. The pressure is now strong enough to threaten the survival of low-cost models and force some makers to scale back specifications.
The sharpest impact is being felt in phones priced below USD 400, where memory has taken an unusually large share of total component costs. For budget devices, the situation is becoming harder to manage with each passing quarter.
Memory Now Dominates Cost Structure
Omdia said RAM now accounts for as much as 64% of the component cost of ultra-low-cost smartphones. That figure applies to devices with a selling price of USD 99 or lower.
In the USD 100-400 range, memory still makes up about 59% of total component cost. That is a steep rise from Q3 2025, when the share was still around 32% in the same segment.
The USD 400 Line Has Become Critical
Omdia sees USD 400 as an important tipping point in the current market. As memory costs keep climbing, manufacturers are left with two difficult choices: raise prices or remove models in that range from their lineup.
The research firm expects sales of smartphones priced below USD 400 to fall 22% from last year. That forecast suggests the weakness is no longer limited to the cheapest phones, but has already spread into the lower mid-range.
Omdia also said low-end products are starting to look unprofitable based on memory price trends for the next few quarters. At the same time, higher retail prices are seen as another drag on demand.
Vendors Are Adjusting the Lineup
According to Omdia, phone makers have begun retreating gradually and proactively from the low-end segment this year. That shift shows the cost pressure is already shaping product strategy, not just final pricing.
For buyers, this could mean fewer affordable Android options on store shelves. If manufacturers keep cutting back on the cheapest segment, the market may become noticeably narrower.
| Price Segment | RAM Cost Share | Market Signal |
|---|---|---|
| USD 99 and below | Up to 64% | Ultra-low-cost devices face the heaviest pressure |
| USD 100-400 | About 59% | Lower mid-range devices are also under strain |
| Q3 2025 reference | About 32% | Shows how quickly memory costs have risen |
Lower Specs May Be the Next Trade-Off
The impact of the RAM crunch is not limited to visible price hikes. In many cases, manufacturers are expected to cut specifications instead so memory costs do not consume too much of the bill of materials.
Omdia pointed to several possible adjustments, including lower-quality display panels, fewer cameras, smaller sensors, and the use of older chipset generations. These changes would help control costs, but they would also reduce the value buyers get at the same price point.
That means consumers in the affordable segment may end up with phones that look competitive on paper but offer more compromises in practice. The device may still be cheap, yet other parts of the hardware can be pared back to protect margins.
Pressure Could Spread Beyond Budget Devices
The cost shock is most visible in cheap phones, but the report says the effect could extend to more expensive models as well. Even so, the premium segment is still expected to behave differently from the low-end market.
Omdia forecasts smartphone shipments priced above USD 400 will rise 5.7% this year. That suggests higher-priced devices still have enough flexibility to absorb component inflation better than budget models.
The gap between the two segments may widen further if RAM prices stay elevated. Premium phones can usually adjust pricing or preserve specs more easily, while low-cost devices are left with fewer options.
For consumers, the practical result may be a smaller pool of well-balanced Android phones at the lower end of the market. As memory takes a larger share of production costs, affordable phones are being forced to compete not only on price, but on whether they can still be built profitably.
