Sub-$100 smartphones becoming a rarity due to rising AI memory costs
The market for sub-$100 smartphones is shrinking rapidly, driven by soaring memory prices linked to the growing demand from artificial intelligence infrastructure. Global shipments of these low-cost devices fell nearly 60% in Q2 2026 compared to a year earlier, according to IDC data. Chinese manufacturers like Xiaomi have seen their share of sub-$100 smartphones drop significantly—from 27.7% in H1 2025 to just 11.2% by mid-2026. Memory now accounts for nearly 60% of the bill of materials for phones under $200, making low-end models increasingly unprofitable to produce. In response, manufacturers are shifting toward higher-priced devices and premium features to improve margins. Xiaomi's average selling price has risen by about 30% since 2023, while Oppo’s climbed similarly to an average of $300. Despite some revenue from internet services helping Chinese vendors offset pricing pressures, memory manufacturers have little incentive to return to lower-cost production levels. Analysts suggest that even if the supply crunch eases, price increases are likely to moderate rather than reverse.
Topics: AI impact on manufacturing Oppo pricing trends smartphones Xiaomi