Thanks, AI companies: Sub-$400 phones could see a huge decline due to RAM crisis

It’s no secret that there’s an industry-wide RAM crisis at the moment, leading to exorbitant price increases across multiple product categories. We already know the situation looks bleak for $500 midrange phones in the near future, and new research is predicting a similar fate for sub-$400 smartphones.

Research published by Omdia shows that memory costs for sub-$400 phones in Q1 2026 accounted for 59% of the total BOM (bill-of-materials) cost, as shown in the graph below. By comparison, device memory accounted for only 32% of the total component costs in Q3 2025.

The graph shows that cheaper smartphones are taking a bigger hit due to rising RAM costs, while more expensive phones are absorbing some of that impact better, though they aren’t immune to the issue either. While RAM costs are significant for phones priced in the sub-$400 segment, they account for 64% of the cost among sub-$100 phones.

Omdia’s forecast in May predicted that the global smartphone market will fall 12% year-over-year in 2026. The expected 22% decline in shipments of sub-$400 phones may play a big role in this scenario.

With RAM costs eating into already slim profit margins, manufacturers could move away from the sub-$400 segment in 2026 and focus on more premium smartphones. So it’s not particularly surprising that shipments of phones priced over $500 are predicted to grow by 5.7% this year.

We’ve also recently learned how Samsung’s decision to phase out older RAM may adversely impact several midrange and budget smartphones.

For people who are in the market for a sub-$400 smartphone this year, there’s a high likelihood you’ll end up paying significantly more than you would have in 2025 for a similar device. With this in mind, it makes a lot of sense to get a last-gen smartphone in 2026.