Sub-$400 smartphones face sharp decline as AI-driven RAM crisis bites

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Research firm Omdia has forecasted a bleak future for the sub-$400 smartphone segment, largely due to the RAM crisis.

However, shipments of phones priced over $400 are expected to grow by 5.7% in 2026.

The rising memory costs can be largely attributed to AI companies shoring up High-Bandwidth Memory for their data centers.

It’s no secret that there’s an industry-wide RAM crisis at the moment, leading to exorbitant price increases across multiple product categories. We already know the situation looks bleak for $500 midrange phones in the near future, and new research is predicting a similar fate for sub-$400 smartphones.

Research published by Omdia shows that memory costs for sub-$400 phones in Q1 2026 accounted for 59% of the total BOM (bill-of-materials) cost, as shown in the graph below. By comparison, device memory accounted for only 32% of the total component costs in Q3 2025.