Cheap phones will be hard to find this year and in 2027, analysts warn

Budget-conscious mobile shoppers may be struggling, thanks to AI. with Memory costs continue to riseThere may be 22% fewer phones priced under $400 on the market for the rest of this year and into 2027. According to a new report Tuesday from technology research and consulting group Omdia.

While premium phones like iPhone 17 Pro Max and Samsung Galaxy S26 Ultrapriced well above $1,000, continues to push the affordability scale, and consumers with tight wallets willing to forego luxury features are choosing Cheaper phones. But if the makers of these sub-$400 devices are forced out of the market, phone buyers with the least economic protection may be hit the hardest.

Analyst Zakir Lee said that for phones in this price range, memory manufacturing costs nearly doubled between the third quarter of 2025 and the first quarter of 2026. For phones worth more than $400, memory costs increased more than 100%, according to Omdia. Quarterly Smartphone Technology Trends a report.

Some companies are trying to offset increased memory expenses by cutting costs of other components, such as displays, sensors and RF modules, which are in short supply, Lee said.

But Lee said there was little wiggle room to keep phones as cheap as they were with the cost of memory rising rapidly.

With Chinese phone makers such as Oppo, Vivo, Honor, Xiaomi and Transmission forced to raise phone prices, cost-conscious consumers will stop buying them, Li said. As demand continues to decline due to rising prices, Lee expects companies to stop producing low-end phones.

The dismal analysis chimes in What David Lomb, CNET’s managing editor for mobile, learned At the Mobile World Congress in Barcelona in March: Rapid build out of Artificial intelligence infrastructure It uses memory, with a significant amount of RAM needed to run AI systems. It caused a Lack of global RAM This leads to higher phone prices, as well as the possibility that companies will not manufacture cheaper phones, as it would not be worth it.

“Some sellers tell us that they are considering leaving this (budget) segment entirely, because if you sell a phone for $150, and half the cost is memory, where are you going to make money? There’s no point in selling products, right?” Francisco Geronimo, vice president of global client devices at IDC, told Lumb at MWC.

While AI needs a large amount of RAM for its countless operations, phones use it for storage and to keep multiple applications open at the same time.

Expectations for low budget phones

In the short term, Omdia says the global phone market will decline by 12% this year compared to 2025, due to an expected 22% decline in shipments of phones costing less than $400.

In the long term, the prospects look brighter. IDC’s Francisco Geronimo told CNET in March that the RAM crisis should be resolved by the fall of 2027 or early 2028. Building AI infrastructure will slow, and more RAM will be produced.

In the meantime, consumers will stick with their current phones and avoid paying higher prices for upgrades, Forrester vice president and principal analyst Dipanjan Chatterjee told Lumb. To combat this, companies will have to attract people to products other than phones or add more features to phones to convince people to buy them.

For those willing to pay a little more for a new device, Omdia says shipments of phones costing more than $400 will grow 5.7% this year, which matches previous patterns: Even in times of economic hardship, premium phones like the iPhone 17 Pro Max and Galaxy S26 Ultra continue to sell, as their customers are more insulated from financial shocks. Omdia said that as a result of this RAM crisis, phone makers are focusing more on high-end devices, and a large percentage of consumers do not mind spending that kind of money. The per-device memory cost ratio also drops significantly with higher-priced phones, analyst Lee said.