The $150 Phone Still Exists. You Just Won't Want It.

The smartphone industry just turned in its emptiest second quarter since 2013. Global shipments fell 11% year over year, according to early estimates from Counterpoint Research, as a prolonged memory chip shortage pushed handset prices up and demand down.

Here is the number that should stop you, though. Omdia, a technology research firm, forecasts that the industry will ship 152 million fewer phones in 2026 than it did in 2025, a 12.2% contraction, and that total market revenue will grow 6.1% anyway. Sit with that for a second: a historic unit decline, and the till rings louder than last year. Somebody is covering that gap, and it is you. The chip industry knows it too: its own trade group is already lobbying Washington to hand you a tax credit for your next phone rather than touch the shortage minting its record profits. More on that below.

The mechanism is the average selling price. Omdia forecasts the global smartphone average selling price (ASP), the average of what buyers actually pay per device, will jump from $467 in 2025 to $565 in 2026. That 21% rise, equivalent to $98 per phone, is an all-time high in both growth rate and dollar terms. The arithmetic closes neatly:

$$\underbrace{0.878}_{\text{units, } -12.2\%} \times \underbrace{1.21}_{\text{price, } +21\%} \approx 1.06 \quad \Rightarrow \quad +6\% \text{ revenue}$$

A market can shrink by an eighth and still get richer if every remaining buyer pays a fifth more. That is exactly what is happening. And the pain is not spread evenly: it is concentrated, with near-mathematical precision, on the people buying the cheapest phones.

Why Are Phone Prices Going Up in 2026?

The short answer: Artificial Intelligence (AI) datacenters are eating the memory supply. Every phone needs Dynamic Random-Access Memory (DRAM), the fast working memory that keeps apps alive, and NAND flash, the storage chips that hold your photos. The same chips, in vastly larger quantities, go into AI servers, and the AI buildout pays better. Memory suppliers have prioritized AI datacenter customers over consumer electronics, forcing phone makers to pass higher component costs on to consumers, particularly for entry- and mid-range devices.

The price moves are violent even by commodity-market standards. DRAM prices rose as much as 98% in the first quarter of 2026 and were set to jump another 58% to 63% in the second, according to industry tracker TrendForce, a surge some in the industry have dubbed “RAMageddon.” Citi Research puts the second-quarter increases at 44% for DRAM and 53% for NAND. A S&P Global Mobility report counts DRAM up about 70% just since December.

The people selling you the devices have stopped pretending otherwise. “We have never seen a component price increase this much, this quickly,” Apple said in the statement accompanying its June 25 price increases on MacBooks and iPads. Alex Baldock, chief executive of Currys, Britain’s biggest electronics retailer, put the same mechanism in shop-floor terms: AI and datacenters are eating up the world’s silicon supply, leaving less “left over for the likes of mobile phones and laptops.”

The squeeze itself has been documented on this site from other angles: the February warning that the AI boom would cannibalize your next smartphone, the two chips that carry half of Korea’s stock market, and Apple’s surrender on device prices. What the second-quarter data adds is the distribution of the damage. This is not a flat tax. It is a regressive one.

What $170 Buys You Now

You can still buy a cheap phone in July 2026. That part of the headline is true, and how it is true is the story.

Walk the budget aisle and look at what is actually on the shelf. BGR’s roundup of budget phones worth buying, compiled this year, makes the point without meaning to: its cheapest recommendation is the Motorola Moto G from the 2025 lineup, at about $170, with 4 gigabytes of Random-Access Memory (RAM), 64 gigabytes of base storage, and a 720p Liquid Crystal Display (LCD) panel. The reason a 2025 leftover tops a 2026 shopping list is stated just as plainly: Motorola raised prices on its affordable 2026 G-series phones, so the sensible move is to buy last year’s model before it disappears.

That is the pattern across the bottom of the market. The phone that costs what a cheap phone used to cost is a time capsule: last year’s chip, the RAM allocation app developers stopped designing for, the screen technology flagships abandoned a decade ago, and a shorter software-support clock already ticking. The floor for a phone with the staples buyers now expect sits around $300: Samsung’s Galaxy A26 5G launched there in 2025 with a 120 Hz AMOLED display, 8 gigabytes of RAM and a six-major-update promise, and its 2026 successor had not appeared as of BGR’s mid-2026 roundup. The most affordable new iPhone, the 17e, starts at $599.

The vendors are not hiding the strategy. To protect margins, Omdia reports, global vendors are actively scaling back their low-end product lines and shifting production toward mid-to-high-end phones; almost every major brand except Apple has raised retail prices on new-generation products. The long-term outlook is blunter still: major vendors are expected to remain highly conservative about entry-level lineups, and the ultra-low-end segment is projected to shift away from global brands entirely, toward smaller regional manufacturers. The Galaxy and Moto badges are not leaving the market. They are leaving the bottom of it.

The Regressive Arithmetic

The bottom of the market takes the hit for a simple reason: memory is priced in dollars, not in percentages of your phone.

A phone maker buys the same class of commodity DRAM and NAND whether the finished device is a flagship or a corner-store special. When the cost of that memory kit rises by some fixed dollar amount, the percentage impact on each phone is:

$$\text{price impact} = \frac{\Delta M}{P}$$

where $P$ is the phone’s price. A flagship costs roughly eight times what the cheapest phones do, so the identical dollar increase lands roughly eight times harder on the budget device as a share of its sticker. The flagship buyer gets a quiet spec-sheet adjustment. The budget buyer gets a discontinued model.

The second-quarter scoreboard reads exactly the way that equation predicts. Xiaomi, Oppo and Vivo, the three top-five brands most exposed to entry- and mid-range devices, posted the steepest shipment declines. Apple, the least exposed, grew shipments 3% and took a record 20% global share while keeping iPhone prices unchanged. Omdia expects demand to fall heavily in Africa, the Middle East and Latin America, regions that rely on low-end devices and are most sensitive to price increases, while premium-heavy developed markets decline only mildly.

Even the Apple exception is scheduled to expire. The June price increases spared the iPhone, but IDC senior research director Nabila Popal reads the reprieve as tactical: “The iPhone isn’t spared, its hike is coming.”

Who Wins While You Pay More for Less

Follow the money one step up the supply chain and the “crisis” changes shape entirely.

Samsung Electronics, the world’s largest memory maker by sales, was expected by analysts to report second-quarter operating profit of about 86 trillion won (roughly $56 billion), an 18-fold jump from a year earlier and a third straight record quarter. The same company’s mobile division is getting squeezed like everyone else’s, with higher component costs more than offsetting its own handset price rises. One company, both sides of the trade: the division selling memory books records while the division buying it bleeds. Shares of Samsung, SK Hynix and Micron have risen 158%, 273% and 242% respectively this year, pushing all three past $1 trillion in market value. Micron alone has locked in $22 billion in long-term supply commitments from customers scrambling for allocation.

And the queue for that allocation keeps growing. JPMorgan estimates AI memory will absorb 52% of cloud providers’ capital spending this year and more than 70% next year. Automakers have now joined the line: Micron signed long-term memory supply agreements with both Ford and General Motors in early July, two of 16 such deals it outlined in a single quarter. Your next phone is bidding for chips against Nvidia, Ford, and every hyperscaler on Earth.

The industry’s own policy ask completes the picture. SEMI, the chip-industry trade group whose members include the memory giants, wrote to the US government asking it not to intervene in the memory market, and suggested instead introducing a consumer tax credit to respond to surging phone and laptop prices. Read that twice: the industry making record profits from the shortage proposes that taxpayers subsidize the consumers paying for it, so long as nobody touches the shortage itself.

Your Phone Is Doing What Your Car Did in 2021

There is a recent precedent for a chip shortage permanently deleting the affordable tier of a consumer market, and you are probably still paying for it.

When semiconductors ran short in 2021 and 2022, automakers steered scarce chips to their most profitable models, cut cheap trims, and discovered they liked the result. The affordable car never really came back. As of this spring, Cox Automotive counted just 20 models with average transaction prices below $30,000, down from 27 a year earlier, while the average list price of a new vehicle passed $50,000 and average loan terms stretched toward seven years. A handful of new cars still technically start below $25,000, before destination fees and dealer markups do their work. The cheap car still exists too. You just would not want it, and mostly cannot find it.

Phone vendors are now running the same playbook under the same cover: allocate scarce components upward, prune the low end, and let the average price do the earning. If the parallel holds, the next act is predictable as well. When new affordable car supply dried up, used-car prices went vertical. Expect the used and refurbished phone market, currently the budget buyer’s escape hatch, to reprice the same way once enough buyers get pushed into it.

Will Phone Prices Go Down in 2027?

Not in the way you are hoping. Here is the timeline the industry itself was projecting as of mid-2026:

Note what is missing from every row: a return to 2025 prices. Omdia’s forecast is explicit that even as memory prices begin correcting in 2027, the baseline cost of building sub-$100 smartphones will remain too high to support meaningful price cuts, and that 2027 shipments will shrink another 0.9% before recovery starts in 2028. Counterpoint, for its part, expects 2026 to close with shipments down about 14% and the memory shortage persisting into 2027. Stabilization is not relief. It is the new floor.

So treat this the way a careful buyer treated the car market in late 2021. If your phone is limping, replace it before the next wave of increases rather than after: retailers have said the quiet part out loud, with Currys noting it has bought forward enough supply to hold availability only “until at least September.” Last-generation models are the arbitrage, current-enough hardware at pre-RAMageddon prices, and the specific candidates are ranked in the site’s current smartphone guide. Then watch one number in October: if Counterpoint’s third-quarter estimate shows average prices still climbing while shipments fall, the hollowing-out is on schedule, and the $300 floor under a phone worth owning becomes the thing to beat before it turns into $350.