Budget smartphones may become harder to find in 2026 as rising DRAM and NAND prices put exceptional pressure on the lowest-priced devices. Omdia expects global shipments of phones priced below US$400 to fall by more than 22 percent from the previous year.
The shift matters most to buyers looking for affordable devices, as manufacturers have limited room left to cut costs without changing the product itself. Vendors are increasingly weighing higher retail prices, reduced specifications, or a retreat from the least profitable part of the smartphone market.
Low-Cost Models Carry the Heaviest Burden
Memory accounted for about 59 percent of total production costs for smartphones priced below US$400 in the first quarter of 2026, according to Omdia. For devices priced below US$99, the share rose to 64 percent.
That burden has increased sharply from the third quarter of 2025, when memory represented roughly 31-32 percent of costs in the below-US$400 segment. The higher cost of memory chips is reshaping the economics of products that already operate on narrow margins.
| Smartphone Price Segment | Memory Cost Share | Period |
|---|---|---|
| Below US$99 | 64 percent | First quarter of 2026 |
| Below US$400 | 59 percent | First quarter of 2026 |
| Below US$400 | 31-32 percent | Third quarter of 2025 |
| Above US$800 | 26 percent | First quarter of 2026 |
| Above US$800 | 11 percent | Third quarter of 2025 |
Vendors Are Adjusting Their Approach
Omdia said lower-end products are becoming increasingly difficult to sell profitably, prompting vendors to gradually step back from the segment this year. Transsion, Oppo, Vivo, Honor, and Xiaomi have also begun raising prices on some products to protect their margins.
Price increases are not without risk because buyers of budget smartphones are generally more sensitive to even modest changes in price. If pricing moves too far upward, demand may weaken further.
Manufacturers can try to reduce costs through display panels, camera sensors, and radio-frequency modules. Yet that approach is harder in entry-level devices, where component choices are already constrained and further reductions can affect the device structure.
Premium Phones Retain More Flexibility
The outlook is more resilient above the US$400 threshold, where Omdia forecasts smartphone shipments to grow by about 5.7 percent in 2026. Premium buyers are considered better able to absorb higher prices than customers in the entry-level market.
Manufacturers in this tier still have several ways to manage expenses, including using OLED LTPS panels instead of LTPO on certain models. They may also use smaller camera sensors or previous-generation chipsets while retaining more flexibility in the overall design.
Memory costs are also rising in phones priced above US$800, where they accounted for 26 percent of production costs in the first quarter of 2026, up from 11 percent in the third quarter of 2025. Even so, the premium segment has more room to adjust than the market for the most affordable phones.
