Sub-$100 Smartphones Become Rare Due to AI Memory Price Hike
· wellness
The Memory Crunch: A New Era of Exclusivity in Smartphones
The smartphone market has long been characterized by its accessibility and affordability. However, a perfect storm of rising memory costs and shifting manufacturing priorities is ushering in an era of exclusivity, where only those with deeper pockets can afford the latest devices.
Just last year, over 173 million sub-$100 smartphones were shipped globally, accounting for nearly one-third of all handsets sold. But as memory costs continue to soar, this trend is rapidly reversing itself. According to data from IDC, shipments in the sub-$100 segment fell by almost 60% in the second quarter of 2026 compared to the same period a year earlier.
This decline was not limited to any one manufacturer; even Xiaomi, a stalwart champion of affordability, saw its share of sub-$200 devices plummet from 60% to just 52.5%. The blame for this shift lies squarely at the feet of artificial intelligence’s insatiable hunger for memory. As chipmakers prioritize higher-value products used in AI infrastructure, they’ve inadvertently squeezed supplies of those used in smartphones, driving up costs and making it increasingly uneconomic to manufacture low-end devices.
Manufacturers are responding by abandoning their affordable lines and focusing on more lucrative segments. Xiaomi has seen its average selling price rise by a whopping 30% since 2023 to $197. Oppo’s prices have followed suit, climbing by a similar amount to $300. Meanwhile, the company’s sub-$200 share of shipments has fallen precipitously.
In China, manufacturers are leveraging lucrative internet services and app revenues to offset rising costs. However, even with these revenue streams, prices are unlikely to retreat anytime soon. According to Neil Shah at Counterpoint Research, memory manufacturers have little incentive to add capacity for low-end devices, making it difficult to see prices returning to their pre-2024 levels.
Xiaomi’s recent unveiling of its 18 Fold device, starting at an eye-watering 10,999 yuan ($1,640), perfectly encapsulates this trend. Aimed squarely at the premium segment, this phone represents the epitome of exclusivity – a status symbol for those willing to pay top dollar for the latest and greatest.
As the memory crunch continues to tighten its grip on the smartphone market, we’re witnessing a profound shift in the industry. One that threatens to leave behind millions of consumers who can no longer afford the devices they once could. This is not just an issue of affordability; it’s also one of access – who gets to experience the latest technology, and who’s left in the dust?
The writing is on the wall: we’re entering a new era of smartphone exclusivity, where only those with deep pockets can afford the latest devices. It remains to be seen whether manufacturers will find ways to mitigate this trend or if consumers will be forced to adapt to a future where smartphones are no longer for everyone.
As prices continue to rise and affordable options dwindle, one thing is certain – the memory crunch has changed the smartphone landscape forever, ushering in an era of exclusivity that’s as much about status as it is about functionality.
Reader Views
- TCThe Calm Desk · editorial
The memory price hike is finally catching up with us - and it's not just about affordability. With AI gobbling up all available memory resources, manufacturers are being forced to choose between catering to the masses or prioritizing profit margins. The shift towards more expensive devices might be a boon for high-end sales, but it also spells disaster for users who rely on their phones as primary tools for everyday communication and basic computing. What about the people who can't upgrade to a pricier model?
- DMDr. Maya O. · behavioral researcher
While it's true that AI has created a memory crunch for smartphones, we're missing the bigger picture: what happens when affordable devices disappear? Studies have shown that widespread adoption of expensive smartphones can exacerbate social inequalities, leaving marginalized communities with limited access to essential services and information. The focus on high-end devices may be driven by profit margins, but it's time for manufacturers to consider the long-term consequences of creating a two-tiered smartphone market.
- ANAlex N. · habit coach
The memory crunch has always been a ticking time bomb for the affordable smartphone market. What's striking is how manufacturers are responding by abandoning their budget lines altogether rather than innovating within those constraints. By pricing themselves out of reach for the very segment they used to dominate, these companies risk losing their core customer base to emerging players who may not have the same profit margins but can still offer competitive features and price points. This shift could be a game-changer in how consumers perceive affordability in smartphones.