The new reality: cheap phones can’t stay cheap
The memory chip shortage in phones is the growing mismatch between demand for DRAM and NAND and the limited supply available for smartphones, which is driving up component costs, forcing manufacturers to either raise prices or cut performance, and rapidly shrinking the range of truly affordable devices for everyday buyers. Memory chip shortage phones are no longer a distant supply-chain story; they are changing what you can get for your money in very practical ways. Budget phone prices rising is the direct result of smartphone memory costs swelling to dominate the bill of materials, leaving brands with few good choices and consumers with fewer great deals. According to research, memory now makes up nearly 60% of the total bill of materials for sub-USD 400 (approx. RM1,840) smartphones, up from about one-third in late 2025.
How DRAM and NAND price increases squeeze budget specs
Rising DRAM and NAND prices hit mid-to-low-end smartphones hardest because these devices are built on razor-thin margins, with almost no slack left to absorb shocks. For sub-USD 400 (approx. RM1,840) phones, memory now accounts for nearly 60% of the bill of materials, and in phones priced below USD 99 (approx. RM455), that share tops 64% of component costs. When memory alone eats this much of the budget, the classic strategy of trimming a few dollars from the display, camera, or RF modules stops working. To keep prices from jumping even faster, manufacturers are responding by reducing memory specs or downgrading to older processors, simpler camera arrays, and cheaper screens instead of the steady annual upgrades buyers had come to expect. In short, DRAM NAND price increase dynamics mean budget phones are becoming either more expensive or less capable—and often both.
A 22% crash in affordable phones isn’t an accident
The mid-to-low-end smartphone segment is already paying the price for higher smartphone memory costs. Global shipments of phones priced below USD 400 (approx. RM1,840) are projected to fall by more than 22%, dragging the overall smartphone market down by about 12% year over year. That decline isn’t caused by waning interest in phones; it’s driven by the brutal arithmetic of memory chip shortage phones. As DRAM and NAND prices climb, these devices can no longer be sold profitably at former price points, especially when buyers in this segment weigh every dollar. Analysts note that vendors are gradually retreating from the low-end segment as the cost of memory continues to rise. According to Omdia, brands such as Transsion, Oppo, Vivo, Honor, and Xiaomi have been forced to significantly raise retail prices merely to keep their slim margins intact.
AI’s memory appetite: why this isn’t a short-term spike
The uncomfortable truth is that the DRAM NAND price increase story is largely being written in data centers, not phone factories. Explosive demand for memory used in AI infrastructure has pushed chipmakers to prioritize high-bandwidth memory (HBM) and other higher-margin products for AI workloads, reducing available capacity for the older, cheaper memory types that power smartphones. This shift in supply focus creates a tough environment for phone makers forced to compete for leftover capacity and pay higher prices for components that used to be commoditized. While higher-end phones can absorb some of this shock through bigger margins and buyers less sensitive to price rises, budget and mid-range devices are exposed. Smartphones priced above USD 400 (approx. RM1,840) are even expected to grow by around 5.7%, helped by vendors leaning into higher-mid-range and flagship models as lower tiers become financially unattractive.
What budget buyers should do as options shrink
For budget shoppers, the bottom line is harsh: there will be fewer options, higher entry prices, and slower year-on-year improvements as smartphone memory costs stay elevated. If manufacturers keep pulling back from sub-USD 400 (approx. RM1,840) devices, buyers will face a narrower range of models, with more compromises in RAM, storage, cameras, and processors. The impact lands hardest where affordable Android phones are the main gateway to the internet, because a USD 150 (approx. RM690) device turning into a USD 200 (approx. RM920) purchase can be enough to kill demand. Instead of chasing each new release, value-focused buyers may need to pivot. One practical move is to hunt for discounted previous-generation phones, which can offer stronger specs at lower prices than newly launched budget models until component costs settle. In this era of memory chip shortage phones, patience and careful model comparison matter more than ever.
