Memory price spike threatens to price the cheapest phones off the market

Analysts at Omdia say sub-$100 handsets may become impossible to build profitably as memory costs jump 400 percent.

Analysts warn that the lowest-priced smartphones are becoming impossible to manufacture profitably because of a memory chip shortage. According to research firm Omdia, memory costs for handsets priced under $100 are expected to rise 400 percent in the third quarter of 2026. The bill of materials for the most common under-$100 configuration is projected to reach $70, up from $14 in the same period a year earlier. Omdia senior research manager Jusy Hong, speaking during a webinar, said current memory prices already exceed what the entire phone cost to build a year ago.

The expected consequence is a market retreat. Analysts anticipate major vendors abandoning the money-losing budget segment and pivoting to mid-range products, which would push average retail prices upward across the board.

This is a friction signal for connectivity. The under-$100 phone is the on-ramp to the internet for the world's poorest users — the device through which people reach banking, messaging, health information, and work. If that tier disappears or gets more expensive, the cost of getting online rises fastest for those least able to absorb it, widening rather than closing the access gap.

The figures are Omdia forecasts, not realized market data. Hong suggested the segment could revive once memory prices stabilize, with small local players stepping back in — but that recovery is estimated at one to two years away, leaving a real gap in the meantime.

Source: SCMP Tech