Surging memory chip prices make profitable budget phones ‘impossible’, analysts say

Major smartphone vendors will try to abandon the money-losing segment despite strong consumer demand, and pivot to more value-added products As the memory chip shortage persists, budget smartphone makers are taking the hardest hit, with analysts warning that low-priced handsets have become “impossible to manufacture” profitably. The cost of memory for handsets priced under US$100 is expected to surge 400 per cent in the third quarter of 2026, with the bill of materials for the most common configuration reaching US$70 from just US$14 in the same period last year, according to data from research firm Omdia. Current memory prices have already exceeded the total bill of materials for this segment from a year ago, according to Jusy Hong, senior research manager at Omdia. “Considering the memory price hike, it is impossible to manufacture smartphones below US$100 at the moment …[or] in the near future,” Hong said during a webinar on Friday. Major smartphone vendors would try to abandon the money-losing segment despite strong consumer demand, pivoting to more value-added products in the mid-range categories, which in turn would drive up average retail prices, Hong added.

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