The global market for sub-$100 smartphones is rapidly shrinking as soaring memory prices, driven by artificial intelligence (AI) demand, make low-end devices increasingly uneconomic to manufacture [1]. According to IDC data, shipments of smartphones priced below $100 fell by almost 60% year-over-year in the second quarter of 2026 [1]. In 2025, sub-$100 devices accounted for 27.7% of Xiaomi's global shipments, but this share plummeted to just 11.2% in the first half of 2026 [1].
The surge in memory costs is attributed to chipmakers prioritizing higher-value products for AI infrastructure, which has squeezed the supply of memory used in smartphones and pushed up costs [1]. Memory now represents nearly 60% of the bill of materials for smartphones under $200, according to Omdia's Chow Sheng Win [1]. IDC Vice President Bryan Ma stated, "Low-end phones are becoming uneconomic to manufacture" [1].
In response, Chinese manufacturers such as Xiaomi and Oppo are shifting their focus to higher-priced models to protect margins. Xiaomi's average selling price has increased by about 30% since 2023 to $197, while Oppo's has risen to $300, according to Neil Shah at Counterpoint Research [1]. Xiaomi's sub-$200 share of shipments dropped from 60% to 52.5% over the same period, and in mainland China, less than 20% of Xiaomi's volume is now below $200 [1]. This strategic shift was highlighted when Xiaomi unveiled its premium 18 Fold model, starting at 10,999 yuan ($1,640) [1].
Despite Chinese vendors' ability to offset some pricing pressure through internet services and app revenues, prices for low-end smartphones are unlikely to return to 2024 or early-2025 levels. Shah notes that memory manufacturers have little incentive to increase capacity for the low end, and even if the memory crunch eases, Ma believes that price increases will only moderate, not reverse [1].
CONCLUSION
The sharp decline in sub-$100 smartphone shipments and rising average selling prices signal a major shift in the market, driven by AI-fueled memory cost inflation. Chinese manufacturers are moving upmarket, and analysts see little chance of a return to previous low price points. The days of ultra-cheap smartphones appear to be ending, with significant implications for both consumers and industry players.