Budget smartphone market shrinks as rising memory costs hit low-cost models in 2026

US smartphone sales decline further in 2026 amid soaring memory prices and economic pressures, with budget models most affected but premium brands like Apple remaining resilient.

US smartphone sales continued to weaken in the second quarter of 2026, as higher component costs and a softer economy cut into demand. Counterpoint Research said the market fell 5% from a year earlier, with consumers still feeling the effect of pricier fuel and other goods, while memory demand from AI data centres pushed up input costs for handset makers.

The sharpest pressure is at the bottom of the market. According to Omdia, shipments of smartphones priced below $400 are expected to drop by more than 22% this year, with memory now accounting for as much as 64% of the build cost of ultra-low-cost devices. Industry analysts say DRAM and NAND flash have become expensive enough to squeeze already thin margins, leaving budget brands with little room to absorb the hit.

That is reshaping the competitive balance. Counterpoint said the combined sales of Apple, Samsung, Motorola and Google fell only 4% year on year, while sales from all other brands slumped 45%. Larger groups can secure parts more easily and negotiate better terms, whereas smaller vendors are increasingly being forced either to raise prices or withdraw from entry-level models altogether.

Samsung and Motorola have been among the beneficiaries, with their Galaxy A and Moto G lines taking share as rivals retreat. Counterpoint said those ranges have gained from the scarcity of affordable options in the roughly €176 to €264 bracket. The research firm expects smartphone prices to keep rising in the third quarter, even as Apple prepares its next iPhone launch. Apple’s position has remained comparatively resilient: Counterpoint data cited by MacTech showed iPhone sales in the US rose 1.3% in the first quarter of 2026, even as the broader market declined.