What you need to know
- Omdia’s latest research suggests rising memory costs will wound the budget phone market this year.
- Data says the budget phone market could drop by 22%, as companies struggle to find positivity.
- As a result, companies might turn to phones priced higher than $400, seeing as there’s more leeway with swapping out materials to turn a profit.
The phone market crosses into the second half of the year with a sour outlook on budget phones. New research says we might see less of them, and the reason’s still the same.
Early this morning (July 7), Omdia’s research on the budget smartphone market suggests companies reduce production by 22% YoY (year-over-year). The culprit is the same one that’s wreaked havoc across the market already: memory. Omdia states DRAM and NAND prices have continued to soar, contributing to its projections. The post adds that memory has become a significant “burden” on phone makers, accounting for “nearly 60% of the total BOM cost in smartphones priced below $400.”
Android Central’s Take
It probably goes without saying that consumers looking for a budget phone are more “sensitive” or “price conscious.” That’s the whole point of a more affordable, lower-cost phone. And that’s the issue we run into. Prices start soaring for the “affordable” stuff, leaving people with no where to turn but back home.
The totals only get higher the lower the phone costs (for the consumer). This trend isn’t expected to change anytime soon, with Omdia stating memory costs will negatively impact budget phones “for the coming quarters.” As a result, Omdia’s research suggests the market for mid-to-high-range products (priced above $400) could rise by 5.6%.
There are a few reasons for this. For one, Omdia says, “High-end consumers are less price-sensitive, helping to sustain stable demand.” Additionally, it states that higher-priced phones give companies more leeway with their materials and, therefore, cost. The researchers use Chinese companies that have recently opted for LTPO OLED displays, instead of LTPO, saving upwards of $5 per device. The camera module can be tweaked, and the number of lenses can be adjusted, too.
Omdia adds that companies can save roughly 30% to 40% of their costs by opting for past-gen SoCs.
The story in numbers
While demand for budget phones is expected to drop and devices priced over $400 could see growth, Omdia still projects a 12% YoY decline in the overall market for 2026. Omdia states that many overseas makers have had to raise their prices to maintain a “thin profit margin” in these trying times. Budget phones already walk that affordability line, which means everything around the device is kept minimal.
That’s the issue. If everything’s been cut, and if memory prices are soaring, companies are struggling to find the green. Also, raising prices for these budget devices won’t work, as Omdia’s research suggests consumers in this market are “highly price-sensitive,” as if that wasn’t clear enough.
In May, Omdia’s Q1 2026 report confirmed a 3% YoY dip in the U.S. phone market. Memory costs were credited with the decline, alongside “restrained carrier upgrades.” Apple led the charge with 60% of the phones shipped. Samsung held 24% in second place, shipping 7.9 million phones. What’s interesting in the numbers is how the budget sector has shifted. In Q1, phones under $300 rose by 8%, with researchers stating prepaid carrier plans likely aided these devices.