The budget phone market is dying—global shipments down 22% in 2026

Caused by AI data center demand, prices of DRAM and NAND have surged, making it almost unprofitable to keep producing low‑end models.

File photo: TECNO SPARK Go 3, Infinix NOTE Edge

The budget phone market is dying?

Due to rising memory costs squeezing manufacturers’ margins, shipments of budget smartphones under USD 400 will fall by 22% in 2026.

In 1Q26, memory costs swallowed almost 60 percent of the BOM in sub‑USD 400 phones, and shot beyond 64 percent in devices under USD 99.

Vendors are trimming costs in displays, sensors, and RF modules to ease rising memory expenses, but ultra‑budget phones run on razor‑thin margins, leaving little room to offset the squeeze.

Chinese vendors are cutting costs by reverting some high‑end models to LTPS OLED panels, tweaking camera modules with smaller sensors or fewer lenses, and slowing SoC upgrades with older platforms, moves that can save USD 3 to 5 per device on displays and up to 30 to 40% on chips.

The new normal?

Smartphone makers like Transsion, OPPO, vivo, Honor, and Xiaomi are hiking retail prices just to keep their already thin margins afloat.

Emerging markets like the Philippines, India, and Indonesia, where sub‑USD 400 phones dominate, will feel the effect most. Consumers can expect fewer choices and higher smartphone prices.

In Southeast Asia, particularly the Philippines, entry prices are expected to shift closer to PHP 25,000 to PHP 30,000 for decent specs, as vendors have more room to reduce costs in the mid-high-end premium segment. 

If this continues, companies risk losing market share in emerging regions if they abandon budget lines too aggressively.

Analysts expect a rise in second‑hand and refurbished device sales as an alternative.

So, don't be surprised to see phones costing more with fewer specs than last year.

In fact, we are starting to feel the effects already. Brands like Xiaomi-POCO have started hiking their prices; OPPO now has A Series phones in the 20K range; realme has a new entry-level phone in the PHP 17 to 20K range.

Overall, the global smartphone market is expected to decline 12 percent year‑on‑year in 2026.

Source: Omdia