Memory crisis wipes out the $100 smartphone in America
Budget smartphones are disappearing from US shelves faster than at any point in the past decade. Sales of handsets priced below $100 dropped 64% year-on-year in Q2 2026, according to Counterpoint Research, shrinking the segment to roughly a third of its former size. The culprit is a memory chip price surge that has made the cheapest phones impossible to sell at a profit.
The memory squeeze
DRAM contract prices jumped 90–95% quarter-on-quarter in Q1 2026, per the Utmel Memory Market Report, driven largely by AI datacenters absorbing available supply. RAM and storage now eat up a much larger slice of a budget phone's bill of materials, leaving manufacturers with a stark choice: raise prices or pull the product entirely. Many have chosen the latter.
The broader US smartphone market was down 5% over the same period — bad, but nowhere near the freefall at the budget end. The four biggest players (Apple, Samsung, Motorola, and Google) collectively lost around 4% in sales. Smaller brands fell 45%. Companies like HMD, which had already been pulling back from the US prepaid market, found the memory price spike finishing off what thin margins had already started.
Prepaid consolidation
Prepaid — the segment most associated with entry-level phones — dropped 11% overall, but within that decline Samsung and Motorola actually gained ground. Samsung's share of the US prepaid market rose nine percentage points to 47%; Motorola climbed four points to 32%. Together they now account for nearly 80% of prepaid sales.
Samsung's Galaxy A and Motorola's Moto G now dominate the US prepaid shelf, holding a combined 79% share as cheaper rivals exit the market.
Carriers are increasingly betting on Samsung's Galaxy A line and Motorola's Moto G series to anchor their prepaid shelves. With cheaper alternatives gone, those two brands have effectively become the floor.
What comes next
There is no quick fix in sight. Memory price relief is not widely expected before late 2027 or 2028. Global smartphone shipments in Q2 2026 fell 11% year-on-year — the weakest second quarter since 2013 — suggesting the pressure extends well beyond the US. Analysts also flag a structural risk: consumers who trade up past the $100 tier tend not to trade back down, even when supply eventually eases. The budget smartphone as Americans knew it may not return in its old form.