AI’s Memory Land Grab Is Pricing Out the Poor
Budget phone extinction describes the rapid decline of smartphones priced below USD 400 (approx. RM1,840) as soaring DRAM costs, driven by AI data centers’ demand for high-bandwidth memory, turn low-margin handsets into money-losing products that manufacturers are increasingly abandoning in favor of more profitable mid-range and premium devices.
Rising DRAM prices are not an abstract supply-chain hiccup; they are rewriting the economics of the affordable smartphone. Research from Omdia shows that memory now makes up almost 60 percent of the bill of materials for sub-USD 400 (approx. RM1,840) phones, up from around one-third in late 2025. When a single component eats more than half the budget, everything else—from cameras to screens—must be sacrificed or the product dies. At the same time, there is an industry-wide DRAM chip shortage as chipmakers prioritize higher-margin high-bandwidth memory for AI data centers, cutting capacity for the older, cheaper memory used in phones. The result: affordable smartphone prices are rising while the devices themselves stagnate or disappear.
When RAM Is 60% of the Phone, the Math Stops Working
The brutal truth is that DRAM now accounts for up to 60 percent of the total bill of materials in sub-USD 400 (approx. RM1,840) smartphones, making many budget models economically unviable. Phones under USD 99 (approx. RM455) are hit even harder, with memory exceeding 64 percent of component costs. That turns what used to be a balanced cost structure into a lopsided bet on a single, increasingly expensive part. TrendForce expects DRAM prices to jump another 50 percent or more, which would crush any remaining wiggle room.
Manufacturers have already pulled the obvious levers. They have swapped newer LTPO displays for cheaper LTPS panels, saving only a few dollars per device. They are trimming camera modules and stepping back to older-generation processors to shave 30 to 40 percent off those components. But you cannot cut your way out of a component that dominates the entire bill. At some point, a budget phone ceases to be a viable product and becomes a charity project, and big brands do not run charities.
Three Bad Choices for Phone Makers—and None Favors You
Faced with this DRAM chip shortage and cost spike, manufacturers have three options—and every one of them hurts consumers. First, they can discontinue budget lines and shift production priority to mid-to-high-end phones, where memory is a smaller share of the total cost and margins are fatter. That is already happening, with research forecasting a more than 22 percent fall in shipments of sub-USD 400 (approx. RM1,840) devices alongside growth of 5.7 percent for phones above USD 400.
Second, they can raise prices. Brands including Transsion, OPPO, vivo, Honor, and Xiaomi are choosing price hikes to protect thin margins, even though budget buyers are the least able to absorb them. Third, they can hold sticker prices but cut specs: cheaper displays, fewer cameras, older processors, and less RAM. As one clear takeaway, “buyers can expect to get a less capable device than they might previously have expected at a given price point this year.” None of these paths preserves the kind of affordable smartphone that defined the last decade.
How the RAM Crisis Reshapes Everyday Tech Lives
The impact of AI data centers’ memory binge reaches far beyond spec sheets. Rising memory prices are already forcing users to delay upgrades, pay more for higher-tier devices, or turn to the second-hand market instead. Omdia forecasts that the overall smartphone market will fall 12 percent, dragged down by a collapse of more than 22 percent in sub-USD 400 (approx. RM1,840) shipments. Average smartphone lifetimes are stretching from 4.2 years to a projected 4.7 years before the end of the decade as people hold on longer.
This is not a mild inconvenience. If manufacturers reduce their presence in the sub-USD 400 (approx. RM1,840) category, consumers shopping for affordable phones will face fewer options, slower hardware improvements, and higher prices. Entry-level Android phones may get more expensive or less capable, reversing years of progress where cheap devices steadily gained premium features. For millions who rely on a low-cost smartphone as their main connection to the internet, this DRAM-driven squeeze is a direct tax on digital access.
Conclusion: AI Wins, Budget Buyers Lose—Unless We Push Back
The uncomfortable conclusion is that AI data centers’ memory hunger is crowding out the poorest users of connected technology. A key driver behind the shortage is the explosive demand for memory used in AI infrastructure, which has led chipmakers to prioritize high-bandwidth products for data centers and reduce capacity for the older DRAM that powers budget phones. In this tug-of-war, sub-USD 400 (approx. RM1,840) phones are the weakest competitor.
If current trends continue, budget phone extinction will not be a metaphor but a product roadmap. Sub-USD 400 (approx. RM1,840) phones are already disappearing from shelves, and affordable smartphone prices are climbing faster than incomes can keep up. Consumers should treat this as a warning. That means buying strategically—before more lines vanish—and demanding that regulators and policymakers treat access to capable, up-to-date smartphones as an essential part of digital infrastructure. AI does not have to come at the expense of the connected poor, but left unchecked, that is exactly the future we are building.
