The cost of budget smartphones rose by 43 % due to memory expenses; price increases are inevitable

Price Rise in Memory Hits the Budget Segment

Experts predict that the increase in memory costs will be felt especially strongly by manufacturers of inexpensive smartphones and Chromebooks.

According to Counterpoint Research, in the first quarter such companies’ spending on DRAM procurement will rise 25% and account for 43% of all material costs.

What Exactly Is Changing
SegmentConfiguration of MemoryPrice Increase (Q1)Price Increase (Q2)Affordable Smartphones (<$200)6 GB LPDDR4X + 128 GB eMMC––Mid‑range ($400–$600)8 GB LPDDR5X + 256 GB UFS 4.0 14% / 11%+20% / +16%
For flagships (wholesale price >$800), another factor comes into play – the use of a 2‑nm process for mobile processors. As a result, in Q2 the combination 16 GB LPDDR5X + 512 GB UFS 4.1 will be $100–$150 more expensive.

- The share of DRAM in the cost of such devices will rise to 23%,
- NAND – to 18%.

Together these two categories will make up 41% of component costs, which is almost identical for both high‑end and budget models. However, due to larger volumes and newer memory, flagships will increase in absolute terms more.

Short‑Term Forecast
- In the first quarter mobile DRAM price growth is expected >50%,
- NAND – >90% (Counterpoint Research).

Budget smartphones will be most vulnerable because their margins are already low. With a memory shortage, manufacturers are likely to release more expensive models to preserve profitability.

How to Respond to the Challenge
1. Reduce the production of budget models – cut supply volumes.
2. Optimize specifications – use cheaper memory and trim secondary features.
3. Raise prices – this will partially offset rising costs.

Example: if the cost of inexpensive smartphones rises by $30, in higher price segments they could increase by $150–$200.

Thus, the rise in memory prices is already noticeably affecting manufacturers’ expense structures and could lead to losses in the budget segment unless corrective measures are taken.