Memory Shortage to Drive Up Budget Smartphone Prices: Analysts Forecast Price Surge

Analysts warn of a shrinking budget smartphone market in the coming years. According to Omdia’s report, the number of models priced under $400 will decline by 22% as early as 2024 and remain at this level through 2027. The main driver is the rising cost of RAM, which has nearly doubled for devices in this price segment over recent months.

Experts note that manufacturers are attempting to offset RAM price hikes by reducing costs in other components, such as displays or communication modules. However, this does not fully resolve the issue: demand for budget smartphones is falling, and companies are considering exiting the segment entirely. For example, Francisco Jeronimo of IDC stated that when memory costs reach 50% of a $150 device’s price, production becomes unprofitable.

The situation is exacerbated by the AI boom, which demands massive RAM volumes for operation. This has led to a global RAM shortage and rising component prices. In the short term, the smartphone market will contract by 12% in 2024, but analysts expect stabilization between 2027 and 2028 as AI infrastructure expansion slows and RAM production increases.

Meanwhile, the premium smartphone segment is growing. According to Omdia, shipments of devices priced over $400 will rise by 5.7% in 2024. Manufacturers are focusing on flagship models, as their buyers are less sensitive to economic fluctuations, and the RAM cost share in the total device price is lower.