Budget smartphones will be hit hardest as memory prices rise
(2026/01/15)
- Reference: 1768487938
- News link: https://www.theregister.co.uk/2026/01/15/memory_crisis_smartphones/
- Source link:
The memory shortage is forecast to push smartphone prices higher in 2026, triggering a market decline and forcing budget phone makers to merge or disappear.
Industry watchers agree this calendar year will be a tough one for the smartphone industry, following modest growth in 2025 when Omdia says shipments hit 1.25 billion units worldwide.
However, rising memory prices due to shortages have started to affect the market, with mounting cost pressures expected to be a defining factor throughout 2026, forcing vendors to focus on pricing discipline, profitability, and operational efficiency.
[1]
"All vendors are utilizing mitigating tactics by emphasizing long-term partnerships, for example, utilizing scale to secure capacity, and focusing on their supplier base," said Omdia senior analyst Runar Bjørhovde.
[2]
[3]
"The situation is particularly critical for vendors with heavier exposure to entry-level smartphones, which are highly price elastic and where memory and storage costs make up a higher share of the bill of materials."
IDC is largely in agreement, noting that while 2025 was a relatively positive year for smartphones, the industry is now facing a distinctly different outlook.
[4]
"The memory shortage, which is widely considered an unprecedented supply chain disruption, will cause the market to decline in 2026, and the duration of the shortage will ultimately determine the extent of the market contraction," said Ryan Reith, IDC group VP for Worldwide Client Devices.
Prices may rise by 6-8 percent, and this will disproportionately affect the low end of the market. In this tier, vendors will have little choice other than to pass the cost increases on to buyers.
The looming crisis was [5]signposted late last year when analysts highlighted that memory chip manufacturers were primarily allocating production capacity to high-value components used in AI servers and GPUs, for which there is ever growing demand. This leaves less production capacity free for commodity memory chips for PCs, phones, and consumer electronics.
[6]
According to IDC, memory can represent 15-20 percent of the total bill of materials for a mid-range device, while it is about 10-15 percent for a high-end flagship device. As memory prices balloon, phone makers will likely have to raise prices, cut specifications, or both.
New flagship smartphones out this year are less likely to feature increased memory over last year's models, and buyers should not expect to see vendors offering much in the way of discounts.
[7]Buy servers now or cry later: DRAM price spike threatens infrastructure budgets
[8]PC shipments set to hit the buffers as AI guzzles memory
[9]No fire sale for firewalls as memory shortages could push prices higher
[10]The world is one bad decision away from a silicon ice age
Alongside this hike in average selling price for devices, the effect of these pressures could see the market contract 2.9 percent in 2026, IDC believes, or as much as 5.2 percent in its most pessimistic forecasts.
In response, vendors are tightening configurations, aligning launches with component availability, and using channel-led incentives such as services and trade-ins to support higher price points, says Omdia Principal Analyst Sanyam Chaurasia.
Meanwhile, the push for greater economies of scale will drive mergers among the smaller players. This is already becoming evident, Chaurasia claims, citing China-based brand Realme reintegrating under OPPO's umbrella. This points to "early signs of consolidation as vendors seek greater scale to manage rising costs to maintain competitiveness in the decade's second half." ®
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[5] https://www.theregister.com/2025/11/19/commodity_memory_price_rise/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aWlxmNVzn-LdNQvyUi9siQAAAxI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2026/01/14/dram_infrastructure_costs/
[8] https://www.theregister.com/2026/01/12/memory_shortages_price_hikes/
[9] https://www.theregister.com/2026/01/12/no_fire_sale_on_firewalls/
[10] https://www.theregister.com/2026/01/12/silicon_shield_versus_silicon_winter/
[11] https://whitepapers.theregister.com/
Industry watchers agree this calendar year will be a tough one for the smartphone industry, following modest growth in 2025 when Omdia says shipments hit 1.25 billion units worldwide.
However, rising memory prices due to shortages have started to affect the market, with mounting cost pressures expected to be a defining factor throughout 2026, forcing vendors to focus on pricing discipline, profitability, and operational efficiency.
[1]
"All vendors are utilizing mitigating tactics by emphasizing long-term partnerships, for example, utilizing scale to secure capacity, and focusing on their supplier base," said Omdia senior analyst Runar Bjørhovde.
[2]
[3]
"The situation is particularly critical for vendors with heavier exposure to entry-level smartphones, which are highly price elastic and where memory and storage costs make up a higher share of the bill of materials."
IDC is largely in agreement, noting that while 2025 was a relatively positive year for smartphones, the industry is now facing a distinctly different outlook.
[4]
"The memory shortage, which is widely considered an unprecedented supply chain disruption, will cause the market to decline in 2026, and the duration of the shortage will ultimately determine the extent of the market contraction," said Ryan Reith, IDC group VP for Worldwide Client Devices.
Prices may rise by 6-8 percent, and this will disproportionately affect the low end of the market. In this tier, vendors will have little choice other than to pass the cost increases on to buyers.
The looming crisis was [5]signposted late last year when analysts highlighted that memory chip manufacturers were primarily allocating production capacity to high-value components used in AI servers and GPUs, for which there is ever growing demand. This leaves less production capacity free for commodity memory chips for PCs, phones, and consumer electronics.
[6]
According to IDC, memory can represent 15-20 percent of the total bill of materials for a mid-range device, while it is about 10-15 percent for a high-end flagship device. As memory prices balloon, phone makers will likely have to raise prices, cut specifications, or both.
New flagship smartphones out this year are less likely to feature increased memory over last year's models, and buyers should not expect to see vendors offering much in the way of discounts.
[7]Buy servers now or cry later: DRAM price spike threatens infrastructure budgets
[8]PC shipments set to hit the buffers as AI guzzles memory
[9]No fire sale for firewalls as memory shortages could push prices higher
[10]The world is one bad decision away from a silicon ice age
Alongside this hike in average selling price for devices, the effect of these pressures could see the market contract 2.9 percent in 2026, IDC believes, or as much as 5.2 percent in its most pessimistic forecasts.
In response, vendors are tightening configurations, aligning launches with component availability, and using channel-led incentives such as services and trade-ins to support higher price points, says Omdia Principal Analyst Sanyam Chaurasia.
Meanwhile, the push for greater economies of scale will drive mergers among the smaller players. This is already becoming evident, Chaurasia claims, citing China-based brand Realme reintegrating under OPPO's umbrella. This points to "early signs of consolidation as vendors seek greater scale to manage rising costs to maintain competitiveness in the decade's second half." ®
Get our [11]Tech Resources
[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aWlxmNVzn-LdNQvyUi9siQAAAxI&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[5] https://www.theregister.com/2025/11/19/commodity_memory_price_rise/
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aWlxmNVzn-LdNQvyUi9siQAAAxI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2026/01/14/dram_infrastructure_costs/
[8] https://www.theregister.com/2026/01/12/memory_shortages_price_hikes/
[9] https://www.theregister.com/2026/01/12/no_fire_sale_on_firewalls/
[10] https://www.theregister.com/2026/01/12/silicon_shield_versus_silicon_winter/
[11] https://whitepapers.theregister.com/
another great recession 2/great depression 3 inbound?
CountCadaver
Smells like AI is the latest face of disaster capitalism
Thanks ai
retiredFool
One thing you could almost count on up until ai was less expensive electronics. Maybe not actually lower cost, you might just get more for the same price. I buy the low end laptops, consistently 500-600 USD. I've gone from 2G memory and a I think it was probably 100G hard drive 20 or so years ago. Latest was 16G memory/1T SSD. So 8X the memory and 10X the drive space and SSD at that. I'll be quite careful with the current one. I'd hate to have to buy a replacement in the current ai world.
Pre installed malware
Anonymous Coward
"All vendors are utilizing mitigating tactics"
The bigger concern is that these budget phone manufacturers will commit ad fraud or install malware on their devices to collect and sell user's PII.
I have over a half dozen "budget" Chinese Android phones that all have pre installed malware from the manufacturer so this is not unheard of.
(I really need a different hobby and should collect stamps instead)
Force software / bloatware shrink?
Well, that SHOULD be the case, 'cause for > 10 years the optimization in software and their stored data was left on managements "don't care" pile! There is no good reason why the current IOS (on my work iphone SE 2) has to be so slow that sometimes button need more than ten seconds to act.
While apple is a bad example, similar trends on Android, Mac and even normal Linux, and then various browsers and their inefficiencies...
Similar for games, 'cause there ARE modern (or rather newer) games which need way less RAM than others despite similar graphic level.
But who am I kiddin', ---