DRAM and NAND prices reshape smartphones, reveals Omdia smartphone report

As memory prices continue to climb, smartphone makers are facing a difficult balancing act. The latest Omdia smartphone report highlights how rising DRAM and NAND costs are reshaping smartphone economics, putting the biggest pressure on devices priced below $400. The findings suggest that vendors are gradually shifting their focus toward premium models as maintaining profitability in the budget segment becomes increasingly challenging.

Memory Costs Are Changing the Budget Smartphone Market

According to Omdia, DRAM and NAND prices have risen sharply over recent quarters and are expected to continue increasing. This has significantly altered smartphone bill-of-materials (BOM) costs. Between the third quarter of 2025 and the first quarter of 2026, the memory cost share nearly doubled in smartphones priced below $400 and increased by more than 100% in devices above that price range.

By the first quarter of 2026, memory accounted for nearly 60% of the total BOM cost in smartphones priced below $400 and exceeded 64% in models priced below $99. While vendors have tried to offset these increases by lowering costs for displays, sensors, and RF modules, there is little room left to reduce expenses in entry-level devices.

Brands Shift Strategy as Costs Rise

The report notes that manufacturers including Transsion, OPPO, vivo, Honor, and Xiaomi have increased retail prices to protect already thin profit margins. However, higher prices also risk weakening demand because buyers in the low-end segment are highly price sensitive.

As a result, Omdia believes vendors are gradually pulling back from the entry-level smartphone market. The firm forecasts a 12% year-on-year decline in the global smartphone market in 2026, driven largely by a more than 22% drop in shipments of smartphones priced below $400.

Premium Devices Offer More Flexibility

The report expects smartphones priced above $400 to remain resilient, with shipments projected to grow by 5.7% in 2026. Omdia attributes this to manufacturers prioritizing mid- and premium-tier products, continued retail price increases pushing more devices into higher price brackets, and stronger demand from consumers who are less sensitive to price changes.

Manufacturers also have greater flexibility to reduce costs in premium devices. They can adopt LTPS OLED displays instead of LTPO in selected models, adjust camera configurations, or use previous-generation system-on-chip platforms to help absorb rising memory costs.

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