The uncomfortable truth: smartphone prices are rising, and it’s not an accident
The current surge in smartphone prices is driven by a memory chip shortage that has sent DRAM and NAND costs soaring, forcing manufacturers to either raise prices, cut quality, or stop making their cheapest phones altogether as memory now dominates the bill of materials in budget devices.
If your next phone feels more expensive for the same performance, that’s by design, not bad luck. Prices for DRAM and NAND flash—the memory that stores your apps and photos—have shot up. In sub-USD 400 (approx. RM1,840) smartphones, memory now accounts for nearly 60% of total component cost, and more than 64% in phones under USD 99 (approx. RM455). When one part eats most of the budget, something has to give. Vendors used to shave a few cents off displays or sensors to keep price tags low, but those escape hatches are closing. The result: smartphone prices rising across the board, and consumers getting less choice at the bottom end.
AI is hogging the memory, and budget phones are paying the price
The villain here isn’t greedy phone makers alone—it’s AI’s appetite for memory. Memory suppliers are steering production toward high-margin chips for AI data centers instead of the DRAM and NAND used in everyday phones. That shift has helped trigger a global memory chip shortage, squeezing every manufacturer trying to build affordable devices.
Mid-to-low-end smartphones, which already run on razor-thin profit margins, are getting crushed as DRAM NAND costs climb. According to Omdia, shipments of smartphones priced below USD 400 (approx. RM1,840) will drop 22%, dragging the entire market down 12% year over year. That’s not a gentle slowdown; it’s a retreat. Vendors are gradually pulling out of the low-end segment because a USD 150 (approx. RM690) handset turning into a USD 200 (approx. RM920) product risks killing demand. When buyers at the budget end are highly price-sensitive, the memory crisis translates directly into a budget phone decline.
From cheap and cheerful to fewer and pricier: the squeeze on consumers
The practical outcome for everyday buyers is ugly: entry-level phones now cost over 50% more than they did a year ago, so many people are priced out. For cheaper models, memory can represent up to 60% of the total cost; when that component spikes, those phones either get more expensive or stop being worth building at all.
We’re already seeing smartphone prices rising from brands that once dominated the low end. Companies such as Transsion, Oppo, Vivo, Honor, and Xiaomi have been forced to raise retail prices just to keep their slim margins alive. Their shipments have dropped fast, because the buyers who used to grab cheap, powerful phones are now facing higher entry prices and fewer options. For the average user, it means one thing: cheap, powerful phones are on pause for now. If you want anything close to last year’s performance, you’ll be pushed higher up the price ladder.
Why flagships are thriving while the market slumps
Here’s the paradox: even as shipments drop 11% in the worst slump since 2013, premium phones are holding up. Omdia expects smartphones priced above USD 400 (approx. RM1,840) to grow 5.7%, thanks to vendors shifting focus to higher-mid-range and high-end products and wealthier buyers refusing to delay upgrades. As long as AI keeps hogging all the memory, phone makers will focus on pricey models.
Memory’s share of component cost has more than doubled even for phones above USD 400 (approx. RM1,840). That makes flagships attractive: manufacturers can hide rising DRAM NAND costs inside big margins and marketing-friendly features instead of racing to the bottom. Meanwhile, leading brands grew sales or captured extra market share during the slump. They can negotiate better supply deals, absorb shocks, and keep shelves stocked when budget rivals falter. In short, the industry’s center of gravity is moving upscale, and that shift is intentional.
How to protect your wallet in a world of expensive phones
If AI-driven memory demand can push combined DRAM and SSD prices up 130% and smartphone prices 13% higher versus last year, as analysts estimate, waiting for a quick reset is wishful thinking. The memory crisis is not a blip; it is a structural shock that will keep smartphone prices rising, especially at the lower end.
So what can you do? First, accept that like-for-like upgrades will cost more or deliver less power than before. Second, look beyond new devices: if you want a deal, you might have to go refurbished or buy on the second market. When you do, check battery health, confirm the phone has been factory reset, and avoid devices with water damage or locked bootloaders. Buy from sellers who offer a warranty or return window and compare prices with new models to ensure you’re getting real value. Until memory supplies loosen, smart buying—not blind upgrading—is your best defense.
