Consumer Tech

Three Firms Now Decide If Your Phone Stays Cheap

AI data centres are eating the memory chips that budget phones and laptops need. The sub-100-dollar phone is collapsing and prices hold high into 2027. What European buyers and fleet owners should plan for.

Consumer TechBy Servola Tech Desk2026-07-183 min read

AI-assisted, edited by humans. | Editor-in-Chief: Leon Soliman | Editorial standards

Three Firms Now Decide If Your Phone Stays Cheap

Key takeaways

AI data-centre demand has diverted the world's memory supply away from consumer devices, and the sub-100-dollar smartphone segment collapsed about 59 percent year on year in early 2026.
Three companies, Samsung, SK Hynix and Micron, control more than 95 percent of DRAM and have shifted capacity to high-bandwidth memory for AI chips, which earns three to five times more per wafer.
Memory can now account for roughly 60 percent of a budget phone's bill of materials, so the squeeze lands hardest on the cheapest devices and the buyers who depend on them.
Analysts expect elevated memory prices and thinner entry-level choice to persist until at least the end of 2027, so this is a budget line to plan around, not a spike to wait out.
For owners running device fleets, the action is to lock refresh budgets now, extend device lifecycles where safe, and specify memory deliberately rather than assume next year's model costs the same.

The disappearing budget phone

The cheapest phones are quietly leaving the market. In early 2026 the sub-100-dollar smartphone segment fell roughly 59 percent year on year in one of the world's largest markets, and mid-range models saw price rises measured in tens of euros. The devices did not get worse. They got more expensive to build, and at the bottom of the range that difference is the whole business case.

The cause is not tariffs or a factory fire. It is memory. The chips that store a phone's data and let its apps run have become scarce and dear, and a budget device has little margin to absorb the increase. When the cheapest tier moves out of reach, the people it served do not trade up; they hold on to older hardware for longer.

Why memory got scarce

AI ate the wafers. Three companies, Samsung, SK Hynix and Micron, make more than 95 percent of the world's DRAM, and they have redirected capacity toward high-bandwidth memory, the specialised chips that feed AI accelerators in data centres. That memory earns an estimated three to five times more revenue per wafer than the conventional DDR5 in a phone, so the commercial logic is one-directional.

Every wafer turned over to high-bandwidth memory is a wafer not making consumer-grade DRAM and NAND flash. The result is a genuine shortage of the ordinary memory that phones, laptops and cheap servers rely on. This is the first time the AI build-out has reached into a shop window most buyers actually visit.

How far the price moves

On the cheapest phones, memory is now the dominant cost. Analysts estimate memory can make up around 60 percent of a budget handset's bill of materials, which is why the low end is where the pain concentrates. Flagships absorb it; entry devices cannot. The same pressure is climbing into laptops and any product that ships with a lot of RAM or storage.

This is not a two-week blip. Industry forecasts point to elevated memory prices and constrained supply lasting until at least the end of 2027, because new fabrication capacity takes years to build and AI demand keeps rising. Treat it as the new baseline, not a passing spike you can time.

What it means for European buyers and fleets

Europe buys from the same three suppliers, so the same pressure applies. Entry-level Android phones that sat near 120 to 150 euros are drifting up, and the cheap-and-cheerful tier is thinning across the continent and the UK, where the effect shows in pounds just as clearly. For a household that is an inconvenience; for a business, it is a budget event.

Owners who buy devices in volume, field teams, retail points of sale, logistics handhelds, will feel it in per-unit cost and in narrowing choice at the low end. A fleet refresh planned on last year's prices will come in over budget, and the entry model you standardised on may simply no longer exist at that price.

The bottom line for owners

Plan hardware as a rising cost, not a flat one. Lock refresh budgets now with headroom, and stretch device lifecycles where security and support allow rather than replacing on the old cadence. Where a purchase is coming, buying ahead of a further rise can pay, and a well-chosen refurbished fleet is a legitimate hedge while the shortage holds.

Above all, specify memory on purpose. The reflex to over-spec RAM and storage now carries a real premium, so match the device to the job instead of paying for headroom the work does not need.

Frequently asked questions

Why are budget phones getting more expensive in 2026?

Because memory chips have become scarce and costly. AI data centres are consuming the manufacturing capacity that would otherwise make consumer DRAM and NAND, and on a cheap phone memory is a large share of the cost, so the increase hits the low end hardest.

How long will the memory shortage last?

Industry forecasts point to elevated prices and tight supply until at least the end of 2027. New memory fabrication capacity takes years to come online, and AI demand for high-bandwidth memory keeps growing, so a fast return to cheap memory is unlikely.

What should a business buying devices do now?

Set refresh budgets with room for higher prices, extend device lifecycles where support and security allow, consider buying ahead or using vetted refurbished units, and specify memory to match the workload rather than over-provisioning at a premium.

The AI build-out has finally reached the shelf where ordinary buyers shop, and the cheapest device is where it shows first. Budget for that shelf staying pricier well into 2027.

DRAMHBMSamsungSK HynixMicronSmartphonesMemorySupply chain

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