Memory crisis crushes cheap phones. RAM reportedly now makes up to 64% of component costs

We wrote in more detail in a separate article about how artificial intelligence is draining memory production capacities and driving up the prices of almost all electronics. A fresh analysis by Omdia now shows how far this has gone for the cheapest phones: memory in them costs more than the entire rest of the device combined.

Why memory in a cheap mobile phone has surpassed everything else

The analytical company Omdia segments the market by price, and for the absolute cheapest models around $99 (approximately 2 thousand Czech crowns converted), it arrived at a breathtaking figure: the operating memory alone accounts for up to 64% of the cost of all components.

In the broader low-end category, i.e., phones under $400 (approximately 9 thousand Czech crowns), memory costs climbed to 59% of material costs. In the third quarter of last year, this was only 32% – the share has thus roughly doubled in a few months.

Memory crisis crushes cheap phones. RAM reportedly now makes up to 64% of component costs Adam Kurfürst News Adam Kurfürst News

The reason is the same as for the rest of electronics: companies involved in artificial intelligence are massively buying up memory chips for their data centers, and manufacturers Samsung, SK Hynix, and Micron are diverting them away from consumer goods. The effect is hardest on the cheapest phones – the rest of their components are so inexpensive that the increased cost of memory suddenly outweighs the entire bill.

Memory crisis pushes manufacturers out of the cheapest category

Omdia therefore expects the global market for phones under $400 to drop by 22% this year. According to analysts, cheap models are becoming unprofitable, and brands are “gradually and purposefully withdrawing” from this category, according to the report. More expensive phones above this threshold, on the other hand, are expected to grow by approximately 5.7% despite the expensive memory.

Those who remain in the cheap category will look for savings elsewhere. Omdia names weaker displays, worse or fewer cameras, and older generations of processors. In practice, this means only one thing: for the same money, you will get less, or you will pay more for the same features.

Signs are already visible. Nothing introduced the Phone (4b) only slightly cheaper than the more capable Phone (4a), and Motorola this year kept the same chips in most Moto G and Razr series as in previous models. It is also exacerbated by Samsung scaling back production of older memory types, which will most severely affect cheap and mid-range phones.

What does this mean for Czech buyers?

The report does not address specific Czech prices – Omdia calculates in dollars and global shipments. However, the direction is clear for a domestic buyer interested in a cheap phone: the cheapest category will likely shrink, and what remains in it will either become more expensive or lose some features. We will see the exact figures in Czech crowns only when specific models arrive in autumn and next year.

One thing can be said today – the era when a usable new phone cost a few thousand and improved slightly year after year has stalled due to memory. Anyone who doesn’t urgently need a cheap device right away probably won’t make a mistake by looking at last year’s models while they are still in stock at the old price.

Would you opt for a cheap phone today, or would you rather pay extra for a more expensive model?

Sources: Omdia, 9to5Google, Android Authority