How the RAM is hitting $500 phones

As the RAM crisis continues to bite, the first smartphone releases of 2026 are having to contend with the limited availability and rising costs of precious memory. While flagship phones appear to be weathering the storm so far, I’m starting to become a little concerned about our workhorse $500 handsets — the devices that many cost-conscious consumers actually prefer to buy.

It feels strange to say it after some promising, very affordable smartphone releases in the past month. The Google Pixel 10a and Nothing Phone 4a Pro prove that great phones can be had without breaking the bank, and they have other competitors as well. But these devices were all in development and production before the RAM crunch really started to bite. They could yet prove to be the last of a species that is about to become much harder to produce.

The root of the problem sits far beyond the smartphone industry itself. Memory manufacturers are currently prioritising the booming AI infrastructure market, where demand for high-performance DRAM and high-bandwidth memory is exploding. Data centre hardware can command far higher margins than consumer electronics, which means smartphone makers are no longer the most important customers for memory suppliers. As production shifts toward server-grade memory, the supply of phone-grade memory becomes tighter — and more expensive.

Looking at the broader phone landscape, we’ve already seen flagship brands adapt their launch strategies to the RAM profitability issue. Samsung has dropped 128GB storage models from the Galaxy S26 series, as it’s well documented that these models have the lowest margins and will therefore be most impacted by higher component costs. While that’s arguably an overdue change for increasingly media-heavy smartphones, it also allows Samsung to raise its effective entry price without explicitly announcing a price hike.

At the same time, Samsung has held the line at 12GB of RAM (outside of its 1TB Ultra) despite an industry-wide push toward AI features that increasingly benefit from larger memory pools. Xiaomi appears to be moving in similar circles: where the Xiaomi 15 Ultra offered a 12GB RAM / 256GB storage configuration, the Xiaomi 17 Ultra now starts at 16GB and 512GB — and carries an eye-watering €1,499 price tag to match its extreme hardware setup.

So far, it seems flagship devices have absorbed much of these shifts because their margins are significantly higher. Mid-range phones, however, do not have the same luxury.

You have to wonder whether Google’s decision to stick with last year’s Tensor G4 chip in the Pixel 10a (and to leave its RAM unchanged at 8GB) was driven less by product strategy and more by the need to preserve that crucial $499 price point. Google may want its devices to showcase ambitious on-device AI capabilities, but those plans run headfirst into the economics of the mid-range market, which simply can’t pay any price for the memory that on-device AI sorely needs.

Apple has taken a slightly different approach with the slightly more expensive iPhone 17e. Again, it doubles its base storage to 256GB (the 16e had 128GB), uses a powerhouse A19 processor, and offers faster wireless charging, yet keeps the same $599 starting price as last year. It’s an aggressive competitor. However, the compromises are that the display and camera are the same, so it’s mostly a performance upgrade.

At the lower end, the Nothing Phone 4a has a flexible approach to keep its budget phones appealing, offering tiered RAM options and slightly higher prices while relying on cheaper LPDDR4X memory in its base configuration. Its newer processor isn’t much faster than before, so this is the opposite of Apple’s strategy, but the brand has managed to squeeze out bigger camera improvements.

Mid-range smartphones in the $400—$500 segment sit in a narrow band where consumers expect strong specifications but remain highly sensitive to price increases. That makes it much harder for manufacturers to simply pass rising memory costs on to us buyers. It feels like something has to give. Either mid-range phones become more expensive, or the era of generously spec’d $500 smartphones begins to fade.

So what happens next? The most likely outcome isn’t the sudden disappearance of the $500 smartphone, but rather a continuation of trends we’ve already seen this year — a subtle shift in what that price actually buys you.

The most likely scenario is simple stagnation. RAM capacities in mid-range phones may stay stuck at 8GB for longer than expected, even as software and AI features continue to demand more memory. We might also see handsets delay processor, camera, and other upgrades to remain cost-effective. Manufacturers can hold prices steady that way, but the trade-off is that hardware progress slows, and there’s less compelling differentiation between generations.

Another option is quiet price inflation. We’ve already seen hints of it in recent launches: base storage creeping up, cheaper configurations disappearing, and slightly higher starting prices that don’t quite qualify as an official price hike. The $500 phone might still exist, but the “real” mid-range could slowly drift closer to $550 or even $600.

The third possibility is that some features simply move upmarket. If on-device AI continues to expand, and most manufacturers seem convinced it will, then phones with the memory required to run those features smoothly may increasingly sit in more expensive tiers. In that scenario, the mid-range device remains capable, but some of the most ambitious software features become the preserve of premium hardware.

None of this means the affordable smartphone is about to disappear. But if memory prices remain under pressure, the unusually generous value we’ve seen in the $500 bracket over the past couple of years could become much harder for manufacturers to sustain.