The rapid increase in RAM prices is devastating the budget smartphone market. According to a new report from Omdia, memory now accounts for up to 64% of the total material cost for "ultra low" devices sold at $99 or less. For the $100-400 segment, the figure reaches 59%, pushing manufacturers to cut lines or raise retail prices. The phenomenon, dubbed "RAMageddon," is expected to cause a 22% year-over-year decline in shipments of smartphones under $400.
RAM becomes the most expensive component in low-cost devices
The Omdia report highlights that memory costs have more than doubled compared to Q3 2025, disproportionately impacting budget phones. While premium models absorb the increase with larger margins, low-end manufacturers face a drastic choice: raise prices or exit the segment. The critical threshold is set at $400: above this price, the impact is milder, but below it, a gradual retreat is underway. A recent example is Nothing, which with its Phone (4b) was forced into a price point barely cheaper than the more capable Phone (4a), sacrificing specs. This trend is reshaping the Android smartphone landscape, with a contraction in low-cost supply that penalizes price-sensitive consumers.
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Manufacturers forced to cut or withdraw entry-level models
The reaction from brands is already visible. Omdia predicts that shipments of phones above $400 will grow by 5.7% this year, while those below this threshold will plummet. Motorola, for instance, has kept the same chipsets across most of its Moto G and Razr series, avoiding costly upgrades. Other manufacturers are opting for significant downgrades: lower-quality displays, flexible camera configurations with smaller sensors or fewer sensors, and the use of previous-generation SoCs. This means buying last year's hardware is more attractive than ever, as analysts note. Meanwhile, the tech industry looks to other innovations, such as the launch of OpenAI's GPT-5.6 Sol, Luna, and Terra, which absorb production resources and compete for the same components.
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Cost containment strategies: displays and cameras under stress
According to the report, manufacturers are adopting creative measures to avoid exiting the low-end market. Besides downgrading display panels, they are reducing the number of camera sensors or using smaller sensors, lowering overall quality. The choice of processor is also revised: mid-range chips from previous generations become the norm, sacrificing performance to keep costs down. This strategy, however, risks alienating consumers, who may prefer used devices or older mid-range models. In the long term, the budget smartphone market could further fragment, with few players willing to invest in an increasingly unprofitable segment. For more insights on component cost dynamics, refer to the Wikipedia page on RAM memory.
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Source: https://9to5google.com/2026/07/07/android-phones-downgrades-cheap-devices-ramageddon
