Rising Memory Costs Could Reduce Budget Smartphone Shipments by 22% in 2026

Photo Credit: Omdia

By Fahim Shahoriar Rizvi | Updated July 16, 2026 | 

The global smartphone market is facing a significant economic correction. According to Omdia’s Quarterly Smartphone Technology Trends – 1Q26 Analysis Premium, shipments of devices priced below $400 are projected to decline by more than 22% year-over-year in 2026. This contraction is driven primarily by a sharp, sustained surge in memory costs, forcing smartphone vendors to re-evaluate their product strategies and pricing models across the board.

At a Glance

• Sub-$400 Shipments: Projected ▼ 22% YoY decline.

• Premium Segment: Projected ▲ 5.7% growth.

• Primary Cause: Rapidly rising DRAM and NAND flash memory prices.

• Market Strategy: Vendors are increasingly prioritizing higher-margin premium devices.

Why It Matters

The pressure on ultra-affordable devices may signal a structural shift in the smartphone industry. As memory costs consume a larger share of the bill-of-materials (BOM), smartphone vendors are prioritizing higher-margin devices over shipment volume. For consumers, this suggests a future where budget-friendly choices may become rarer, potentially accelerating a move toward a stronger premium-segment orientation.

Why Memory Prices Are Rising

According to Omdia, the current pricing environment is driven by a confluence of industry factors:

• Production Discipline: Memory manufacturers have tightened supply chains to normalize inventories and recover from previous price slumps.

• AI-Driven Demand: Surging requirements for high-capacity memory in AI servers and data centers have prioritized enterprise-grade supply over mobile-grade hardware.

• Supply-Demand Imbalance: A combination of limited capacity upgrades and recovering global demand has kept pricing elevated across the board.

Market Polarization: Low-End Decline vs. Premium Resilience

While the low-end segment faces a sharp decline, the premium market remains resilient. Omdia projects that smartphone shipments priced above $400 will grow by 5.7% in 2026. This reflects widening consumer spending differences, with buyers in premium segments continuing to prioritize flagship features despite higher prices.

Price Segment	2026 Shipment Trend	Key Driver
Under $99	▼ Sharp Decline	Memory BOM costs
Below $400	▼ 22% YoY	Higher BOM share
Above $400	▲ 5.7% Growth	Premium demand

Regional Impact

Budget smartphones are especially critical in emerging markets, where first-time buyers and price-sensitive consumers dominate demand. Higher component costs could slow smartphone adoption in regions such as India, Southeast Asia, Africa, and Latin America, where markets are particularly vulnerable to even minor retail price increases.

Likely Vendor Responses

Note: The following strategies reflect likely industry responses based on current market trends and analyst observations.

• Storage Tiers: Launching more 128GB base models instead of 256GB.

• Reduced RAM: Standardizing 4GB/6GB RAM configurations for longer periods.

• Refreshed Chipsets: Using mature, older-generation chipsets in new budget releases to save costs.

• Product Cycles: Extending product refresh cycles to keep prices stable.

FAQ

• Why are smartphone prices increasing? Rising DRAM and NAND prices have increased the memory share of total BOM costs, forcing vendors to adjust retail pricing and hardware strategies.

• Which smartphone segment is affected the most? The sub-$400 segment, particularly devices priced under $99, faces the highest pressure, with a projected 22% shipment decline for 2026.

• Will flagship phone prices also increase? Flagship phones are more resilient; vendors have more flexibility to reduce costs in other component areas (like displays or sensors) to absorb memory price hikes.

Disclosure & Verification

This analysis is based on industry research, publicly available market data, and analyst forecasts, specifically Omdia's Quarterly Smartphone Technology Trends – 1Q26 Analysis Premium. Future shipment estimates and pricing trends may change as new information becomes available and market conditions evolve.

Source: Omdia - "Global smartphones priced below $400 will decline by 22% as memory costs soar" by Zaker Li (July 7, 2026)

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