Rising RAM costs driven by global memory shortages are forcing manufacturers to increase prices for budget smartphones, threatening the profitability and availability of devices priced under $400.

Key Points

• Research firm Omdia reports that memory costs now comprise up to 64% of the total bill of materials for smartphones priced below $99.
• Global shipments of sub-$400 smartphones are projected to decline by 22% this year as manufacturers struggle to maintain thin profit margins.
• Increased demand for memory chips in AI data centers has created a supply chain bottleneck, driving up costs for consumer electronics companies.
• Major brands including OPPO and Xiaomi face pressure to raise retail prices to offset the rising expense of DRAM and NAND components.
• Other tech companies, including Microsoft and Apple, have already implemented price hikes on consoles, laptops, and tablets due to these supply constraints.

Why it Matters

The rising cost of memory components is fundamentally altering the economics of the budget electronics market, making affordable devices increasingly difficult for manufacturers to produce profitably. This trend forces consumers to face higher retail prices or limited options, potentially slowing the adoption of new technology among price-sensitive demographics.