Why Cheap Phones Are Getting More Expensive in 2026

Reviewed by: Y. Garcia

The cheapest phones in the US just got a lot harder to find. Sub-$100 smartphone sales fell roughly 64% year-over-year in the second quarter of 2026, while the overall US smartphone market slipped just 5% over the same span, according to Android Authority.

That gap between a near-collapse at the bottom and a modest dip everywhere else says something specific about why cheap phones are getting more expensive, and it traces back to a component most buyers never think about.

Smartphone memory prices jumped more than 80% quarter-over-quarter in Q2 2026, and the component cost of building a comparable low-end phone rose 70% year-over-year, with most of the increase attributed to higher memory prices, according to Counterpoint Research data cited by EET Asia. Those are two different kinds of measurements: one tracks what it costs manufacturers to build a phone, the other tracks what actually sold at retail.

They don't prove a strict one-to-one cause, but paired with Counterpoint's own explanation that smaller manufacturers raised prices or exited the segment entirely, they sketch a clear sequence. Memory costs squeezed margins, vendors responded by cutting low-end orders, tightening portfolios, or raising prices, and the shelf space for genuinely cheap phones shrank as a result.

The ultra-budget tier isn't just getting smaller. It's being reorganized around a narrower set of large brands and a higher price floor, which changes what "affordable" actually means for the buyers who relied on that tier the most.

The sub-$100 smartphone sales decline, and why Q2 didn't come out of nowhere

The scale of the drop is easiest to see next to who didn't suffer it. Combined sales from Apple, Samsung, Motorola, and Google fell only 4% year-over-year in Q2 2026, while every other manufacturer combined saw sales plunge 45%, according to 9to5Mac's reporting on the Counterpoint data. That gap falls almost entirely on the companies that historically built the sub-$100 category in the first place.

A quarter earlier, the picture looked different. Omdia found the sub-$300 segment actually grew 8% in Q1 2026, helped by channel inventory that vendors and carriers pulled forward ahead of anticipated price increases.

That included stock built up specifically before Motorola's April price hikes. Carriers and prepaid channels, not individual shoppers, were the ones stockpiling ahead of the increase.

That earlier pull-forward reframes the Q2 numbers rather than undercutting them. Some of the severity of the sub-$100 collapse may be a payback effect: demand that got borrowed from Q2 into Q1 before prices rose. If anything, that sharpens the underlying story. Vendors and carriers were already bracing for higher costs months before the sales data confirmed just how much damage those costs would do.

Why cheap phones are getting more expensive: the memory squeeze

Memory is the clearest documented driver in the available research. DRAM makers are prioritizing higher-margin products like HBM and server memory to meet surging data center demand, reducing available capacity for legacy and consumer memory products used in smartphones, according to Counterpoint Research. That single shift accounts for much of the rising smartphone component costs now squeezing budget devices.

The squeeze compounds because it isn't limited to one chip. As older LPDDR4 memory is phased out, manufacturers may need to move entry-level devices onto newer platforms and memory configurations, which can raise platform costs beyond DRAM alone.

A manufacturer may need to change the SoC or memory configuration when moving away from legacy LPDDR4, adding costs beyond the memory component itself.

Counterpoint calls the sub-$150 tier the "worst hit" of the entire market, because memory now makes up an outsized share of the bill of materials at that price point, pushing OEMs to restrict shipments and raise prices simultaneously. Analysts saw this coming well before the sales data caught up. TrendForce flagged entry-level products as facing "the most severe pressure and risk of elimination" in a report late last year, months before the Q2 collapse confirmed it (TrendForce).

None of this proves precisely which sub-$100 model got cut or exactly how many buyers walked away empty-handed. What it does explain is the mechanism: a low-end phone with comparable specifications to a 2025 device in the same tier cost about 70% more in components in Q2 2026, per the same Counterpoint analysis, and that extra cost had to land somewhere.

It landed on price tags, on shipment volumes, or on manufacturers exiting the business altogether.

Where the affordable tier is landing: $200-$300, not $80

As white-label and smaller prepaid vendors raise prices or retreat from the segment, Samsung and Motorola have picked up prepaid market share, according to both Android Authority and 9to5Mac. Carriers are leaning increasingly on Samsung's Galaxy A series and Motorola's Moto G lineup to fill the low end of their offerings.

The mechanism is straightforward: as smaller vendors are forced to raise low-end prepaid phone prices just to stay viable, the gap between carrier-branded or white-label phones and Samsung's and Motorola's budget lines has narrowed considerably, according to Android Authority. The $200-$300 segment grew sharply as a share of US smartphone sales in Q2 2026, evidence that the practical "cheap phone" tier moved upward rather than disappearing outright.

That growth comes with an important caveat: it happened inside a shrinking pie. Overall prepaid sales still fell 11% year-over-year in Q2 2026. This isn't an across-the-board decline in the affordable smartphone market; the sharpest pressure is concentrated at the sub-$100 end, while prepaid sales also weakened overall.

Samsung and Motorola gained share in a shrinking category, not in one that got bigger.

Taken together, the data shows a redrawn ladder. Fewer sub-$100 options sit on the shelf, a narrower field of sellers controls what's left, and the segment where "affordable" sits has shifted toward $200 to $300 in branded devices. Whether individual shoppers are simply paying more, delaying upgrades, or turning to the used market isn't something this sales data can answer directly. But the menu of new options has measurably changed.

How low-end manufacturers are holding on, and what buyers get in return

Manufacturers that stayed in the entry-level game didn't do it by absorbing the full cost hit. OEMs have cut orders for entry-level products and reworked their portfolios specifically to guard against near-term losses on models that stopped being profitable to sell, Counterpoint's data show. Fewer units, fewer models, tighter margins on what remains.

The mid-tier tells a similar story with numbers of its own. Bill-of-materials costs there rose 52% year-over-year in Q2 2026, and memory alone accounted for 40% of that total, per the same Counterpoint research. Manufacturers are compensating by adopting lower-cost or older-generation chipsets and, in some mid-range devices, scaling back processor and camera configurations.

Carrier financing is softening the blow, but the picture there is incomplete. Omdia's Q1 2026 data shows carriers leaning on financing, promotions, and plan-led offers to keep list-price increases from fully reaching consumers. That mechanism is documented for carriers broadly; the research doesn't specify whether it reaches the prepaid and white-label shoppers who made up the vanishing sub-$100 tier in the first place. Omdia itself raised the open question of "how long carriers can absorb or delay these increases."

What's documented instead is a shift in strategy: order cuts, older-generation chips, and pared-back camera and processor configurations. That's an industry absorbing cost pressure through capability as well as price, though the data doesn't offer a direct spec-for-spec comparison of this year's budget phone against last year's equivalent.

Where cheap phones go from here

That mechanism, cost shock cascading into vendor exits and a sales collapse, now spans two consecutive quarters of data. What's less settled is where it goes from here.

There's little reason to expect quick relief. Counterpoint expects the memory shortage to persist through 2027, while industry researchers continue to warn of further smartphone pricing pressure. DRAM has already overtaken the processor as the single most expensive component in a premium smartphone, per Counterpoint's cost breakdown. That matters because it means carrier subsidies and financing, the tools that have kept most postpaid buyers insulated so far, are being asked to absorb a bigger gap between what phones cost to build and what shoppers expect to pay.

The structural fix, if there is one, sits further out. Counterpoint's supply-chain research suggests the broader smartphone supply chain is not expected to normalize until around early 2028, while the migration away from legacy LPDDR4 is already accelerating. Until then, whether the current price floor is a temporary squeeze or a lasting redefinition of "affordable" is a question the sales data can describe but not settle on its own.

That's worth sitting with, because the numbers here measure availability, not appetite. A 64% drop in sub-$100 sales shows what buyers could find on shelves; it doesn't show whether they still wanted a $90 phone and simply couldn't get one, or moved on entirely. What's clear is that the options changed first, and changed sharply, before anyone had a chance to answer that question.