Budget smartphones priced under $400 might become significantly less affordable in 2026 as memory prices soar. According to Omdia, memory currently accounts for nearly 60% of production costs in these devices. With DRAM prices expected to rise by over 50% next year, manufacturers face a tough choice: raise prices or reduce features.
This increase hits the budget segment hard-a category long defined by offering decent smartphones without breaking the bank. When a memory kit alone costs more than $200 in a $400 phone, manufacturers must cut costs elsewhere. Omdia predicts cost-saving moves such as cheaper displays, fewer cameras, lower-quality sensors, and older processors will become common.
For buyers, the impact won’t be limited to higher prices. Some phones may maintain their price point but deliver worse screens, cameras, or overall performance. Omdia forecasts a 22% drop in shipments of phones under $400 in 2026, while models priced over $400 could see a 5.7% increase. This is because it’s easier for manufacturers to spread higher memory costs across more expensive components in premium devices.
The memory market is no stranger to volatility. In 2024 and 2025, major players like Samsung, SK hynix, and Micron repeatedly raised contract prices for DRAM and NAND following a period of oversupply. A significant current driver is demand from AI servers and data centers, which consume high-margin memory much faster than budget electronics ever could.
All this comes amid a backdrop where people are holding onto smartphones longer. The average replacement cycle has stretched to about 4.2 years and may reach 4.7 years by the decade’s end. This trend increases the appeal of the used phone market-Omdia predicts secondhand smartphone sales will climb 12% in 2026.
Another challenge for brands is the rising global average selling price of smartphones, according to Counterpoint Research, driven by higher profits from pricier models. If memory costs continue climbing, the budget segment could face a fate similar to compact smartphones-remaining available but with a significantly reduced range and fewer appealing options.