With the deepening of the RAM crisis in the smartphone market, the production of budget-friendly Android phones, especially in the sub-$400 segment, has come under significant risk. The latest report published by Omdia reveals that the rapid increase in memory costs is forcing manufacturers to abandon economical models or reduce hardware features.

The fact that RAM costs have risen to 64% of total production costs, especially in entry-level devices, is pushing technology companies to change strategies. The two-fold increase in memory prices since the third quarter of 2026 destroys the profitability of affordable smartphones and shrinks the presence of these devices in the market by 22%.

Due to increasing costs, many manufacturers are deciding to remove low-priced smartphone models from their production lists altogether.

RAM Costs Force Manufacturers to Save Money

The pressure of memory prices on budget-friendly devices leads manufacturers to impose various hardware restrictions. In order to maintain profit margins, companies resort to techniques to replace display panels with lower quality ones or shrink camera sensors. Additionally, the use of older generation chipsets in new devices has become a widespread trend.
This creates a market environment where consumers actually have to settle for last year’s technology when buying a “new” phone.

Market Dynamics Are Changing

According to market analysts, the $400 level has become a critical threshold in the smartphone world. While the production of models below this price point becomes economically unsustainable, the increase in demand for devices over $400 continues.

In order not to be crushed under cost pressure, manufacturers are either forced to raise their prices or withdraw from this segment altogether and focus on devices in the middle and upper segments.

The continuation of the trend in memory prices in the coming quarters indicates that affordable options for low-budget users will decrease even more.

Old Hardware Becomes More Attractive

The launch of new generation budget-friendly phones with trimmed features for cost-saving purposes directs consumers to second-hand or previous year’s flagship models.

The fact that brands such as Motorola continue to use old chipsets in their current series is a concrete example of this strategy. Cost-oriented choices instead of hardware upgrades are gradually weakening the meaning of the “new phone” concept.

Do you think it would be better for smartphone manufacturers to increase prices instead of cutting down on hardware features to reduce costs, or how would abandoning affordable models altogether affect the market? Share your ideas with us in the comments.