Budget smartphones are collapsing as memory costs surge, according to Omdia. Phones priced below $400 are expected to drop 22% in 2026, with DRAM and NAND now eating up most of the cost.
In Q1 2026, memory made up nearly 60% of the bill of materials for sub-$400 devices, and more than 64% for phones under $99. That means there’s little room left for profit, forcing brands to raise prices or cut back on entry-level models.
Transsion, OPPO, vivo, Honor, and Xiaomi are pulling back from the low-end. Price hikes protect margins, but demand is falling fast as budget buyers step away. Omdia also sees overall smartphone shipments shrinking 12% year-on-year in 2026, with the decline centered on the budget tier.
Midrange and premium phones are holding up better. Shipments above $400 are set to grow 5.7% this year, helped by buyers who are less sensitive to price and by vendors finding ways to cut costs elsewhere. Some brands are switching back to LTPS OLED panels, scaling down camera sensors, or using older chipsets to balance expenses.
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The market is splitting. Budget phones are losing ground, while premium models keep growing. For consumers, that means fewer affordable choices and a wider gap between entry-level and high-end smartphones.
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