Rising Memory Prices Shrink Market for Budget Smartphones in 2026

The budget smartphone market is expected to contract significantly in 2026 due to sharp increases in memory component prices, according to new research from Omdia. Shipments of smartphones priced under $400 are forecast to decline by about 22% compared to last year, while devices costing over $400 are projected to grow by approximately 5.6%. Manufacturers are shifting focus to more profitable mid-range and premium models amid rising costs.

The main driver behind this shift is the rising cost of DRAM and NAND memory chips, which are essential for device operation and storage. Omdia reports that memory components now account for roughly 59% of hardware costs in smartphones priced below $400, up from about 32% at the end of 2025. For ultra-budget phones under $100, memory costs already represent around 64% of production expenses. This increase directly impacts manufacturers' ability to offer affordable devices at attractive prices.

Raising prices is not a straightforward solution, as the target consumers for budget phones are highly price-sensitive. Many may delay purchases or opt for older models instead. Omdia expects continued pressure on the low-cost smartphone segment in the coming quarters, as memory prices are unlikely to decrease soon. Consequently, manufacturers may allocate more resources to mid-range and premium devices, which better absorb component cost hikes.

Overall, the global smartphone market is predicted to weaken, with a forecasted 12% decline in 2026 due to high component prices and slower consumer upgrade cycles.