Will Cheap Smartphones Vanish From the Market? New Industry Report Raises Alarm

Planning to buy a budget smartphone? You may have to spend more in the coming months. According to a new report by market research firm Omdia, the sharp rise in DRAM and NAND memory chip prices is significantly increasing smartphone manufacturing costs, particularly for devices priced below $400 (around ₹34,000).

The report warns that the rising cost of memory components could force smartphone brands to increase prices, potentially reducing the availability of affordable smartphones in the global market.

Memory Chip Prices Push Up Smartphone Manufacturing Costs

Omdia says the steady increase in DRAM and NAND flash memory prices since last year has dramatically changed the Bill of Materials (BOM) for smartphone manufacturers.

Key findings from the report include:

Memory costs in smartphones priced below $400 are expected to nearly double between Q3 2025 and Q1 2026.

For smartphones priced above $400, memory costs are projected to rise by more than 100% during the same period.

By the first quarter of 2026, memory chips could account for nearly 60% of the total manufacturing cost of smartphones priced below $400.

For ultra-budget smartphones priced below $99 (around ₹8,500), memory already contributes more than 64% of manufacturing costs.

Brands Cutting Costs Elsewhere

To offset rising memory expenses, smartphone companies are trying to reduce costs in other hardware components, including:

Display panels

Camera sensors

Radio Frequency (RF) modules

Other internal components

However, manufacturers have limited room to cut costs in entry-level smartphones because these devices already operate on extremely thin profit margins.

Popular Smartphone Brands Likely to Increase Prices

According to Omdia, memory chip prices are expected to remain elevated in the coming quarters.

As a result, several major smartphone brands—including:

Xiaomi

OPPO

Vivo

Honor

Transsion

are reportedly increasing smartphone prices to protect profitability.

Budget Smartphone Buyers Could Be Hit Hardest

The report notes that consumers in the affordable smartphone segment are highly sensitive to price increases.

Higher prices could reduce demand for budget smartphones, prompting manufacturers to gradually shift their focus toward mid-range and premium devices, where profit margins are stronger and pricing pressure is relatively lower.

Global Smartphone Market Expected to Slow

Omdia forecasts a 12% year-on-year decline in the global smartphone market in 2026.

The report attributes this slowdown largely to a 22% drop in shipments of smartphones priced below $400, while premium smartphones priced above $400 are expected to record 5.7% growth, supported by stronger consumer demand and healthier margins.

What It Means for Buyers

If memory chip prices continue to rise, affordable smartphones could become more expensive over the next few months. Consumers planning to upgrade to a budget device may benefit from purchasing sooner rather than waiting, as manufacturers are expected to pass on a portion of the increased component costs through higher retail prices.

The report also suggests that the smartphone industry is increasingly shifting toward premium devices, making value-for-money budget smartphones harder to find in the future.