Sub-$100 smartphones are nearly extinct — and AI is to blame

The cheapest tier of smartphones has effectively disappeared from US retail. Sales of phones priced under $100 fell 64% year-over-year in Q2 2026, per Counterpoint Research, even as the overall smartphone market slipped just 5%. If you've been waiting to grab a bargain handset, that window has mostly closed.

The memory crunch

The driving force isn't consumer tastes — it's memory chips. DRAM prices have risen roughly 70% since early 2025, and NAND flash has nearly doubled. Memory now accounts for as much as 20–64% of the total bill of materials for a budget phone, according to Tom's Hardware. The root cause: Samsung, SK Hynix, and Micron have redirected wafer capacity toward high-margin AI server chips — HBM and high-density DRAM — leaving commodity smartphone memory in short supply. No meaningful relief is expected until new fab capacity comes online around 2028.

For a flagship phone, that's painful. For a $79 device with already razor-thin margins, it's unsurvivable.

The big four hold, everyone else doesn't

Apple, Samsung, Motorola, and Google — the four brands with the scale to negotiate favorable supply deals — saw combined sales fall only 4% in Q2. Smaller OEMs lost 45% of their volume. Scale is the entire story: large brands locked in component pricing and supply agreements that their smaller rivals simply couldn't match.

Even in the prepaid/carrier segment, where overall sales dropped 11%, Samsung and Motorola managed to gain ground. The trade-off is price. Motorola pushed its Moto G lineup into the $200–$300 range, and Samsung raised the Galaxy A17 by $50 in July. Both moves squeezed out white-label ODM devices that carriers previously stocked at the sub-$100 level.

$200 is the new budget

The $200–$300 price band tripled its US market share year-over-year in Q2 2026, per Counterpoint. Shoppers who used to pick up a $79 prepaid phone at Walmart now face a choice: spend more, buy refurbished, or wait. Analysts at Sammy Fans note that Samsung's dominance of the DRAM supply chain — the company controls around 39% of global DRAM output — gives it a structural advantage no smaller Android maker can replicate.

Global smartphone shipments are expected to fall 15% across 2026 as a whole. With no memory price relief in sight before 2028, the sub-$100 phone looks like a permanent casualty rather than a temporary dip.