AI Memory Crunch Makes Sub-$100 Smartphones a Rarity

The decline is especially visible for Xiaomi. Sub-$100 devices made up 27.7% of the Chinese company's global shipments in the first half of 2025; a year later, that share had dropped to 11.2%, IDC data showed.

The main pressure comes from memory. Chipmakers have prioritized higher-value products used in AI infrastructure, squeezing supplies of memory used in smartphones and pushing up costs. Memory now accounts for almost 60% of the bill of materials for smartphones priced below $200, according to Omdia's Chow Sheng Win.

"Low-end phones are becoming uneconomic to manufacture," said Bryan Ma, IDC vice president of client device research.

To lift margins, Chinese manufacturers are moving upmarket. As cheaper models become uneconomic to produce, they are pruning them from their line-ups, pushing the overall market higher. Neil Shah of Counterpoint Research estimates Xiaomi's average selling price has risen about 30% since 2023 to $197, while Oppo's has climbed by a similar amount to $300.

Xiaomi's share of shipments below $200 fell from 60% to 52.5% over the same period, according to IDC data. In mainland China, less than 20% of Xiaomi's volume is below $200, Chow said. This week Xiaomi unveiled its higher-end 18 Fold, starting at 10,999 yuan, or $1,640, aimed squarely at the premium segment. Xiaomi did not immediately respond to a request for comment outside normal business hours.

Chinese vendors can offset some pricing pressure through lucrative internet services and app revenues at home, but prices are unlikely to retreat soon. Shah said it is difficult to see prices returning to 2024 or early-2025 levels because memory manufacturers have little incentive to add capacity for the low end. Ma said even if the memory crunch eases, "that just means that the price increases moderate," not reverse.