The End of Affordable Smartphones? What a New Report Reveals
If you have been considering purchasing a new smartphone for under 35,000 rupees, you might want to act quickly. A fresh analysis from market research firm Omdia indicates that the cost of DRAM and NAND memory chips is climbing steadily, pushing budget-friendly devices into higher price brackets. This trend is prompting several manufacturers to rethink their strategies, gradually stepping away from the entry-level segment.
Memory Costs Are Reshaping the Market
The Omdia report highlights a dramatic shift in the bill of materials (BOM) for smartphones, driven primarily by rising memory expenses. Between the third quarter of 2025 and the first quarter of 2026, the share of memory costs in phones priced under $400 (roughly 34,000 rupees) nearly doubled. Even in devices above that threshold, memory’s share surged by over 100 percent. This cost inflation is hitting the low-budget segment hardest, where every rupee counts.
By the first quarter of 2026, memory components accounted for approximately 60 percent of the total manufacturing cost for smartphones under $400. For the most affordable models—those below $99 (around 8,500 rupees)—that figure exceeded 64 percent. Such numbers leave very little room for manufacturers to absorb expenses without raising prices.
How Companies Are Responding
To offset the rising memory costs, smartphone makers are trimming expenses on other components, including displays, camera sensors, and radio frequency (RF) modules. However, entry-level devices already operate on razor-thin profit margins, limiting the scope for further reductions. As a result, brands like Transsion, OPPO, Vivo, Honor, and Xiaomi have begun increasing retail prices to protect their bottom lines.
This price hike poses a significant challenge for budget-conscious consumers, who are highly sensitive to cost changes. Many companies are now pivoting away from the low-cost arena, shifting their focus toward mid-range and premium segments where margins are healthier and hardware adjustments are more feasible.
Global Market Predictions
Omdia forecasts that memory prices will continue to rise in the coming quarters, further squeezing the budget smartphone market. The firm projects a 12 percent year-over-year decline in global smartphone shipments for 2026. This downturn is expected to be driven largely by a 22 percent drop in shipments of devices priced under $400. Conversely, sales of smartphones above $400 are predicted to increase by 5.7 percent, as premium buyers are less affected by price increases and manufacturers have more flexibility to cut costs on other hardware.
- Under $400 segment: Facing a 22 percent shipment decline due to rising memory costs and reduced consumer affordability.
- Above $400 segment: Expected to grow by 5.7 percent, supported by less price-sensitive customers and greater cost optimization opportunities.
What This Means for You
For consumers seeking a new smartphone on a tight budget, the window for affordable options is narrowing. The combination of escalating memory prices and manufacturers’ strategic shifts means that the era of ultra-cheap devices may be fading. If you are planning a purchase, sooner may be better than later, as prices are likely to keep climbing. Meanwhile, the industry’s move toward mid-range and premium offerings suggests that future innovations and features may increasingly cater to higher spending brackets, leaving budget buyers with fewer choices.
