Omdia research forecasts global shipments of smartphones priced below $400 will decline by more than 22% this year. (Image source: 123RF)
The escalating prices of DRAM and NAND flash memory threatens to reshape global smartphone economics, placing pressure on mid- to low-end smartphone devices.
This is according to market research firm Omdia, which forecasts global shipments of smartphones priced below $400 (about R6 500) will decline by more than 22% this year.
This, as manufacturers contend with higher memory costs and weakening consumer demand in the entry-level segment, says the research firm.
Omdia’s latest research indicates that both DRAM and NAND flash memory prices have increased sharply over recent quarters and are expected to continue rising.
In smartphones priced below $400 (about R6 500), memory accounted for almost 60% of the bill of materials (BOM) in the first quarter of 2026, while devices priced below $99 (R1 600) allocated more than 64% of their BOM to memory.
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According to Omdia, smartphone vendors are trying to offset some of the pressure from rising memory costs by reducing the cost of other components, such as display panels, sensors and radio frequency (RF) modules, where supply remains abundant.
However, low-end smartphones are already designed around extremely tight cost structure, making it difficult to offset higher memory costs by cutting costs elsewhere.
Zaker Li, principal analyst of the Omdia consumer team, says the situation will worsen as memory prices continue to rise in the coming quarters.
He notes that vendors including Transsion, Oppo, Vivo, Honor and Xiaomi have increased retail prices to offset higher component costs. However, higher prices could dampen demand in the budget segment, where consumers are more price-sensitive.
By contrast, smartphone shipments above $400 will remain resilient and are expected to grow by 5.7% in 2026, highlights Li.
“Vendors have more room to reduce costs in the mid-high-end premium segment. The memory cost share in smartphones priced above $400 falls rapidly as product prices rise, especially for products priced above $600, where higher-specification system on a chip, displays and camera modules account for a larger share of the total BOM.”
Connectivity considerations
Higher priced smartphones are often listed among the key barriers to digital inclusion, particularly on the African continent.
For example, in South Africa, government opted to remove ad valorem excise duty on lower value (less than R2 500) smartphones in April last year.
Ad valorem duties (or luxury tax) are taxes levied on commodities as a certain percentage of their value. For smartphones, these duties are charged at a flat rate of 9%, classifying them as luxury goods.
Championed by National Treasury and the Department of Communications and Digital Technologies (DCDT), the decision to remove the luxury tax was to enhance smartphone affordability at the lower end of the price spectrum and support efforts to promote digital inclusion for low-income households.
The result has been 1.1 million entry-level smartphones sold in the first 11 months (March 2025 and February 2026) following the removal of the luxury tax, according to the latest GSM Association (GSMA) report on smartphone acceleration through tax reform.
Based on the GSMA data, this equates to placing an average of around 100 000 additional smartphones in the hands of South Africans every month over the 11 months of the reporting period.
The report further highlights that the value of the smartphone market increased by approximately R400 million per month, from R2.7 billion to R3.1 billion.
In addition, removing the luxury tax reversed a sustained decline in entry-level smartphone sales and placed the segment on a growth trajectory, according to the GSMA.
“Every smartphone in the hands of a South African unlocks opportunities for economic activity,” comments DCDT minister Solly Malatsi.
“The growth in smartphone sales represents far more than people buying new devices. This is a prime example of how the right policy decisions, supported by collaboration across government, can remove barriers and give more South Africans opportunities that improve lives.”
