By Connect Digital World | Mobile Tech Made Easy
Imagine your favourite snack costs ₹10. One day the farmer who grows the main ingredient says, “I can make more money selling it to a big factory, so I am raising my price a lot.” The shopkeeper now has two choices: raise the price of the snack, or make the snack smaller. Both choices make customers unhappy.
Something very similar is happening to budget smartphones. The main ingredient is memory chips, and their prices have shot up. Phone makers are now raising prices, cutting RAM, or even stopping some cheap models. In this guide, we explain the whole story in simple words, for India and the rest of the world, and show you how to buy smart.
Quick Summary: The News in 30 Seconds
- Memory chip prices (DRAM and NAND) have risen sharply. Some reports say they nearly quadrupled since late 2025.
- The main reason is the AI boom, because AI data centres are eating up huge amounts of memory.
- Cheap phones are hit hardest, because memory now takes a much bigger share of their cost.
- Many big brands are pulling back from low-end phones, or keeping RAM and storage the same instead of upgrading.
- In India, 4G phones and Indian brands are getting more attention as 5G budget phones get pricier.
- Prices may stay high until at least next year, according to analysts.
What Are DRAM and NAND? (Simple Explanation)
Every phone needs two kinds of memory. Let us use a school desk and a school bag to explain.
DRAM = Your Desk (RAM)
DRAM is the memory that people call RAM. It is like the desk where you spread out the books you are using right now. A bigger desk lets you work on many things at the same time, like having a game, music and chat open together without everything slowing down.
NAND = Your School Bag (Storage)
NAND flash is the storage memory, like 64GB, 128GB or 256GB. It is like your school bag, where you keep photos, apps, videos and files for a long time, even when the phone is switched off.
Both are made by only a few big companies, including Samsung, SK Hynix and Micron. So when these companies change prices, the whole phone industry feels it.
Why Are Memory Prices Soaring? Meet the AI Boom
The answer is a short word with a huge effect: AI.
AI chatbots and tools run inside giant buildings full of computers called data centres. These servers need enormous amounts of memory, including a special, very expensive type called HBM, or high bandwidth memory. Memory makers earn much more money from AI-server memory than from phone memory, so they have shifted more of their factories to making it.
Reports say that this has left less capacity for the normal memory used in phones. Some AI servers are even using low-power DRAM, which is a type commonly found in smartphones. When many buyers want the same limited supply, prices go up.
The Lemonade Stand Example
Imagine there are only 100 lemons in the whole town. A huge restaurant offers to pay triple for 80 of them. Now the kids who run lemonade stands have only 20 lemons left, and they have to pay more too. The restaurant is the AI data centre, and the lemonade stands are phone makers.
How Bad Is It? The Numbers
Here are the key figures reported by industry trackers and news outlets. Remember, these are estimates and can change.
- Memory costs have nearly quadrupled. Counterpoint-linked analysis says DRAM and NAND prices rose nearly fourfold since September 2025.
- Memory’s share of a cheap phone’s cost has exploded. Counterpoint said that in India’s sub-₹15,000 segment, memory’s share of the bill of materials went from below 20% to more than 45%. (The “bill of materials” is the total cost of all the parts in a phone.)
- Phone prices are rising. One report says global smartphone retail prices went up by roughly 20% this year.
- More increases may come. TrendForce expected smartphone DRAM prices to rise another 8% to 13% in the third quarter.
- The cheapest phones are shrinking. According to one analysis, India’s sub-$100 phone segment fell by about 74% in the second quarter of 2026, and the average phone price hit a record high. Treat this one as an estimate from a single source.
- 4G is rising. Counterpoint data shows 4G smartphone shipments in India grew 40% quarter on quarter in Q2 2026.
DigiTimes reported earlier this year that memory costs were surging at an unprecedented rate and threatening the survival of low-priced phone models.
Why Are Budget Phones Hit the Hardest?
You might wonder: if memory is expensive, why don’t expensive phones suffer too? Here is the simple answer.
1. Memory Is a Bigger Slice of a Cheap Phone
If a phone costs ₹60,000 to build, a few thousand rupees of extra memory cost is small. If a phone costs ₹10,000 to build, the same increase is a big bite.
2. Thin Margins
Budget phones earn only a tiny profit on each sale. There is no room to absorb extra costs. A premium phone has more profit room, so brands can handle rising prices more easily. Analysts at Omdia say this is making the smartphone market more polarised, with premium phones continuing to advance while budget phones get squeezed.
3. Price-Sensitive Buyers
Customers who buy a ₹9,999 phone will not accept ₹14,999. If a company raises the price too much, people simply do not buy. So some brands decide it is not worth making certain models at all.
What Are Phone Companies Doing About It?
Option 1: Raise Prices
The most obvious choice. Many brands have increased prices on existing models and set higher launch prices on new ones.
Option 2: Freeze or Cut RAM and Storage
Instead of moving from 6GB to 8GB RAM, brands keep the older amount. Some cut RAM or storage on certain variants. Analysts say vendors are actively freezing memory at previous-generation levels. For you, that can mean less smooth multitasking and less room for photos, videos and updates.
Option 3: Stop Making Cheap Models
Some global brands are reducing their presence in the budget segment, or retiring their lowest-priced phones, so that they can focus on profitable models.
Option 4: Move to 4G, or Cut Other Features
A 4G phone uses simpler parts and costs less than a 5G one. Counterpoint noted the price gap between 4G and 5G phones in India, which is why 4G is finding buyers again. Other brands trim extras, such as cameras, fast charging or display quality, to save money.
Option 5: Let Local Brands Step In
In India, reports say global brands pulling back is giving local names a chance. Companies like Ai+ and Lava are stepping into the gap, and older names such as Micromax and Karbonn are said to be planning comebacks, helped by government support for local manufacturing.
What Does This Mean for India?
India is one of the biggest phone markets in the world, and the ₹15,000-and-under segment is where many first-time smartphone users start. When that segment shrinks, it can slow down how fast new people get online.
- The “cheap 5G phone” may become less cheap, and a basic 4G phone may become the more affordable choice for many people.
- Festive-season deals may help, but the base prices are higher than before.
- Indian brands have an opportunity, though they also face the same memory costs.
- Refurbished and used phone markets may grow, as people look for better value.
The same story is playing out in other countries. Budget phone buyers in Africa, Southeast Asia and Latin America are also facing higher prices and fewer choices.
Will Prices Come Down?
Nobody knows for sure, but most analysts expect high prices to stay for a while. A Counterpoint analyst was quoted as saying component prices are unlikely to return to normal before next year, so affordability will stay the industry’s biggest challenge. Memory makers are adding some factory capacity, but they take time to build and may focus on AI memory first.
Another analysis suggests that the price floor for a viable smartphone may have moved permanently above $100. That is only one view, so we should not treat it as a fact, but it shows how serious the change could be.
How to Buy a Budget Phone Smartly Right Now
Do not panic. There are still good choices if you know what to look for. Here is a friendly guide you can share with family.
1. Choose RAM and Storage Wisely
- 4GB RAM is the bare minimum today, and it may feel slow with many apps.
- 6GB RAM is a comfortable sweet spot for most people.
- 8GB RAM is nice to have, but not necessary at the budget end.
- 128GB storage is a good starting point. If you take lots of photos, consider more or plan to use cloud storage.
2. Do You Really Need 5G?
If 5G coverage is poor where you live, a good 4G phone can save money. If you plan to keep the phone for three or four years, a 5G phone may be a safer long-term choice. Think about your area and your usage.
3. Look at Software Updates
A phone that gets security updates for several years is better value than a slightly cheaper one that is abandoned after a year.
4. Consider Last Year’s Model
Older models from the previous year are often discounted and still perform well. Check that they are sold with full warranty from a trusted seller.
5. Check Refurbished Options Carefully
Certified refurbished phones from reputable sellers can be a good deal. Look for a warranty, a return policy and a clear battery health report.
6. Wait for Festive or Sale Offers
Big shopping seasons bring bank discounts, exchange offers and cashback. Always compare the final price after offers, not just the sticker price.
7. Look Beyond the Spec Sheet
Do not choose only by big numbers. Read reviews about real performance, battery life, heating and camera quality.
8. Take Care of the Phone You Already Have
If your current phone still works, you can make it last longer:
- Delete unused apps and clear old files.
- Back up photos to the cloud or a computer.
- Replace the battery instead of the entire phone if it drains quickly.
- Use a case and screen protector to avoid expensive repairs.
- Keep software updated for security.
Should You Buy Now or Wait?
Buy Now If…
- Your phone is broken, unsafe or no longer gets updates.
- You find a good festive deal on a model you have researched.
- You need the phone for school or work.
Wait If…
- Your phone still works well.
- You are only tempted by a small upgrade.
- You can wait for sales and exchange offers.
Remember that waiting may not bring lower prices if memory costs stay high. So the best strategy is to buy when you truly need it, and then keep the phone for longer.
The Bigger Picture: AI Is Changing Everyday Gadgets
This story shows how connected the tech world is. A boom in AI data centres on one side of the world can change what a student pays for a phone on the other side. And it is not only phones. Laptops, game consoles and other devices that use memory can also feel the effects.
On the bright side, higher prices can push companies to design smarter, more efficient phones, and they can give local manufacturers a chance to grow.
Simple Word List (Glossary)
- DRAM: The memory used as RAM, for running apps right now.
- NAND: The memory used for long-term storage of files and photos.
- HBM: A very fast, expensive memory used in AI servers.
- Data centre: A building full of computers that power online services and AI.
- Bill of materials (BOM): The total cost of all parts in a phone.
- Margin: The profit a company makes on each product.
- 4G / 5G: Mobile network generations; 5G is newer and usually costs more in a phone.
- Refurbished: A used phone that has been repaired and tested for resale.
- Polarisation: A market splitting into two extremes, here premium and budget.
Frequently Asked Questions (FAQ)
Why are budget phones getting more expensive?
Because memory chip prices (DRAM and NAND) have risen sharply, and memory is a large part of a cheap phone’s cost.
Why are memory prices rising?
Mainly because AI data centres need huge amounts of memory, and chipmakers are shifting production toward higher-profit AI memory.
Are cheap phones under ₹15,000 disappearing?
They are shrinking, and many brands are raising prices, cutting RAM or retreating from the lowest end. But some options still exist, especially 4G models and phones from local brands.
Why are brands cutting RAM?
RAM is expensive right now, so some brands keep the same amount as older models, or reduce it on certain variants, to hold prices down.
Will 4G phones become more popular?
In India, 4G shipments rose 40% quarter on quarter in Q2 2026, according to Counterpoint, because they cost less than 5G models.
When will prices come down?
Analysts say it is unlikely before next year, but nobody can be sure.
Is it a good time to buy a phone?
Buy only if you need to. If you do, compare festive deals and consider last year’s models or certified refurbished phones.
Does this affect only phones?
No. Laptops and other devices that use memory can also become more expensive.
Final Thoughts
The end of cheap phones may sound dramatic, and it is not the end for everyone. But the days of very low-priced phones with generous specs are under pressure. The AI boom has pushed memory prices up, and budget phones, with their thin profits, are paying the biggest price.
The good news is that you have choices. Think carefully about the RAM you need, consider 4G, compare older models, and look after your current phone. A smart buyer can still find good value, even in a tough market.
Have you noticed higher prices or lower specs on budget phones near you? Tell us in the comments. For more easy tech news, keep following Connect Digital World.
Sources and further reading: Counterpoint Research data as reported by Business Standard and Moneycontrol, DigiTimes, Omdia commentary via TechNewsWorld, TrendForce data via Korea JoongAng Daily, NewsBytes and other reports. Figures change quickly, so check the latest numbers.
