Omdia: RAM and storage prices are soaring, forcing smartphone makers to cut other specs

RAM and storage prices are climbing at a staggering pace. And manufacturers are starting to offset those increases by cutting back elsewhere in their devices’ spec sheets.

As you may already know, the electronics industry is facing an unprecedented squeeze. With new AI data centres being built at scale, demand for memory chips has surged. The result is a shortage that is driving up the cost of RAM and storage for smartphone makers, PC brands, console manufacturers, and more - and the trend is still upwards. Memory has now become the most expensive single component in a mid-range smartphone.

Why RAM and storage costs are exploding

According to a recent report from Omdia, in the first quarter of 2026, memory accounted for almost 60% of component costs in devices sold for under $400, and that share rose above 64% for models priced below $99. Unfortunately, the same publication says brands are trying to absorb rising memory costs by compromising on other hardware choices. As a consequence, some affordable smartphones may end up being less compelling than they should be, simply because this industry-wide crisis is forcing trade-offs.

Omdia: memory dominates the bill of materials

Omdia explains it like this: “Smartphone manufacturers are trying to partially offset the pressure from rising memory costs by reducing the cost of other components, such as displays, sensors and radio-frequency (RF) modules, where supply remains abundant”. On entry-level models (the most affordable smartphones), however, this cost-offsetting approach is harder to apply.

Less advanced screens, fewer sensors, and older chips

Omdia says some Chinese manufacturers have already switched certain models back to LTPS OLED panels instead of LTPO, which is the more advanced technology. As a result, LTPO displays would now be reserved for the most premium devices. This change could save between $3 and $5 per handset.

And that is not the only lever available. The firm notes that brands can also rethink camera setups - for instance, by using smaller sensors or by cutting down the number of rear sensors. On the processor side, some manufacturers may opt for a previous-generation component rather than fitting the latest chip in a smartphone. For products priced above $600, that could reduce costs by 30% to 40%.

In some situations, unfortunately, devices are simply cancelled. Nothing, for example, chose not to release the CMF Phone 3 Pro, which was expected to be an affordable yet appealing product. Akis Evangelidis, Nothing’s co-founder, explained: “We were working on a successor [to the CMF Phone 2 Pro], but with current memory prices, we cannot build a phone that represents a real step forward at a price that makes sense for CMF”. He added: “We’d rather be upfront about it than release a product we wouldn’t be proud of.”

The cheapest smartphones will be hit hardest

Because this memory-chip crunch is affecting the whole supply chain, a sharp drop in smartphone sales is expected in 2026. However, Omdia’s analysis suggests that devices priced above $400 should prove more resilient, with the firm forecasting shipments up by 5.7% in 2026 for that segment.

The logic is straightforward: in a crisis like this, brands tend to prioritise higher-priced products. And buyers shopping at the premium end are generally less sensitive to price rises.