Global smartphone shipments under $100 drop 60% as AI memory costs rise
Sub-$100 smartphone shipments fell nearly 60% in the second quarter of 2026 compared to the previous year. Memory components now make up almost 60% of bills of materials for devices under $200.
The market segment for smartphones priced below $100 is shrinking as memory component costs surge. Global shipments of devices in this category accounted for approximately 173 million units last year. IDC data indicates that Q2 2026 saw shipments in the sub-$100 segment decline by roughly 60% from the same period in 2025. This sharp reduction contrasts with performance seen in China's Xiaomi sector, where the share of sub-$100 models dropped from 27.7% in the first half of 2025 to just 11.2% the following year. Analysts attribute this trend to artificial intelligence demand driving up raw material prices. Memory usage now comprises nearly 60% of total bills of materials for smartphones under $200, Omdia's Chow Sheng Win noted. Consequently, manufacturers are finding low-end production financially unviable. Bryan Ma, an IDC Vice President of Client Device Research, stated that producing budget phones has become uneconomic. In response to rising costs and a need to protect margins, Chinese manufacturers are shifting their focus toward higher-priced models. Counterpoint Research analyst Neil Shah estimated Xiaomi's average selling price increased by approximately 30% since 2023, reaching $197.
