The budget phone is the first casualty of the RAM crunch

What happens to a phone market when the cheapest phones stop making financial sense? India just gave us a preview. And the lesson isn't limited to India.

India's smartphone shipments fell 20% year over year in the July to September quarter, according to Counterpoint, weighed down by memory price pressures. The detail that matters most is in the breakdown: shipments of phones under Rs 20,000 declined 47%, while Samsung led the market with a 17% share.

The headline says 20%, but the story is the 47%

A 20% drop is a market-wide hit. A 47% drop in one price band is a different thing: it is the part of the market where a handset's margin can be wiped out by one component. In a cheap phone, memory is a big slice of the bill of materials, so when its price jumps, the maker has few places to hide. Shattered.io, citing Intel CEO Lip-Bu Tan, says memory now eats up to 80% of the cost of budget phones and laptops. We'd treat that as a claim from a secondary source, but it fits the pattern.

The global numbers point the same way. IDC puts worldwide Q3 shipments at 255.3 million units, down 22%, and says memory costs have surged about 350% since last year. Counterpoint measured a 20% decline. Two firms, slightly different methods, same story.

Scale wins, and the cheap end pays

Look at who lost volume. According to IDC, Xiaomi's shipments fell 29.2%, OPPO's 34.5% and vivo's 31.5%, while Samsung and Apple both gained market share despite shipping fewer phones. IDC's Francisco Jeronimo noted that Chinese brands' exposure to low-end phones forces them to choose between protecting margins and defending volume.

That's the uncomfortable logic of a shortage: the vendors with scale, secure supply and a premium mix come out ahead, and everyone selling on thin margins gets squeezed. We think the winners here aren't really winning. They are shrinking more slowly.

Expect less phone for the same money

The shift may already be visible in specs. Gagadget reports that Motorola's upcoming Moto G47 Power is expected to launch with just 4GB of RAM at around €270, though Motorola hasn't officially announced it. The same piece cites a Weibo leaker saying budget models will fall back to 4GB. Treat that as a rumor, but a plausible one. A big battery and a 108MP sensor look good on a spec sheet, yet 4GB is thin for current Android.

So India isn't an outlier; it's the early warning. Cheap phones are where price sensitivity is highest, so in our view makers have little room to simply raise prices and will be tempted to trim RAM or thin out their lineups instead. Meanwhile the top end is raising prices openly. Tom's Guide notes a $100 hike on the iPhone 18 Pro Max, and The Verge reports Samsung raised US prices on the Galaxy S26 line. Buyers in the US may not see a 47% collapse in cheap phones, but they will probably see the same squeeze in a different form: pricier flagships and weaker entry models.

Buy for the RAM line, not the megapixels

IDC expects growth to remain limited through 2027, with a possible recovery delayed until at least 2028. Our advice follows from that, and it's opinion, not certainty:

• Check the RAM line before the camera line. If two phones cost about the same, take the one with 6GB or more.
• Don't buy a budget phone on its battery and megapixels alone.
• If your current phone works, keeping it longer is rational, which is exactly what IDC says many buyers are doing.

The industry loves to say that AI will make phones smarter. In the short term it looks like it is making the cheapest ones worse. That is the real cost of the RAM crunch, and the people who can least afford a premium phone are paying it first.