Memory Costs Are Quietly Squeezing Low-End Phones and PA Suppliers

Power amplifier (PA) shipments are taking the hit in a 2026 smartphone market already reshaped by memory prices, with a July 9 supply-chain note on memory cuts hitting PA volumes naming PA volumes as the supplier line under the most pressure. Brand owners are trimming low-end production and delaying new model launches to keep margins above water, supply-chain sources told DIGITIMES in the same report.

The bill-of-materials cost on a sub-$200 phone has risen 20% to 30% since the start of 2025, per Counterpoint Research, with mid- and high-end devices up 10% to 15%. Counterpoint’s December note has memory prices running another 40% higher through Q2 2026, which would push bill-of-materials costs up another 8% to over 15%. Gartner’s February forecast on memory costs cutting PC and smartphone shipments adds the bigger consumer frame: smartphone shipments down 8.4% in 2026 versus 2025, with phone prices up 13%.

Power Amplifier Suppliers Are the Tell on Budget Phones

The DIGITIMES story is short on company names and long on what the supply chain is doing. Brand owners are trimming output on low- and mid-range handsets because the memory bill inside those phones has stretched past the price points consumers will accept. PAs do not add brand value the way a camera module does, so when a brand owner has to cut something to keep a $179 phone alive, an RF front-end component is often the first place to look.

Counterpoint’s December note spelled out the same arithmetic, warning that some companies may downgrade camera modules, displays and audio, as well as reuse older components, while pushing consumers toward higher-priced devices. PAs feed off the units that survive this cull, and they sell under heavier volume pressure than the application processor or the modem, both of which are tied to higher-tier devices where the brand has more room to absorb cost.

How Memory Got This Scarce

The squeeze starts in AI data centers, not handset engineering. Hyperscaler demand for high-bandwidth memory has pulled DRAM and NAND supply toward server buyers, and consumer-grade memory has run hot since early 2025.

Gartner measured the cost damage in its February press release. It forecasts a 130% surge in combined DRAM and solid-state drive prices by the end of 2026, with PC shipments falling 10.4% and smartphone shipments falling 8.4% compared with 2025. Senior director analyst Ranjit Atwal called it “the steepest contraction in device shipments witnessed in over a decade.” Gartner also expects PC memory to peak at 23% of total bill of materials, up from 16% in 2025.

Counterpoint’s December note added more granular timing. Smartphone shipments could fall 2.1% in 2026 versus a previous outlook of flat-to-positive growth, and the average selling price could jump 6.9% year on year, against a prior forecast of 3.6%. TrendForce research has LPDDR5 mobile DRAM up around 70% since early 2025, and NAND flash up around 100%. An analysis of how the memory shortage is squeezing phones and PCs from IDC frames the consumer squeeze as a secondary effect behind data-center build-out, the same ordering the supply-chain firms are using in private briefings.

Why Sub-$200 Handsets Run Out of Wiggle Room First

On a $150 to $199 device, a 20% to 30% jump in bill-of-materials cost since the start of 2025 leaves a brand owner with three exits.

• Eat the cost and shrink margins, betting that volume and replacement-cycle demand will hold.
• Raise the retail price and risk shrinking the addressable market for a budget phone.
• Cut the spec sheet to absorb the cost elsewhere, with older or smaller components in camera, audio, or display.

Counterpoint said some brands are already downgrading camera modules, displays and audio, while reusing older components. Gartner’s separate forecast has basic smartphone buyers leaving the market five times faster than premium buyers in 2026, the same dynamic Atwal expects to drive the sub-$500 PC segment to disappear by 2028.

Samsung may raise Galaxy S26 prices at its February 25 launch, citing the LPDDR5 and NAND moves per a TrendForce note. Apple is taking the opposite path, absorbing most of the cost rise on the iPhone 17 family, per Counterpoint’s read. Every brand below those two, particularly the Chinese original equipment manufacturers in the mid and low tiers, has less room on either side, and that asymmetry is the read the DIGITIMES brief is reporting from the production line.

The Forecasts Vary by More Than the Headlines Suggest

Counterpoint and Gartner are saying the same thing in different registers. Counterpoint’s 2.1% decline is a smaller number than Gartner’s 8.4%, because Gartner is counting price-shocked buyers leaving the market and Counterpoint is counting units shipped to retail. Both are right for what they measure.

The spread matters more for the supply chain than for the consumer, given where PA vendors sit. Gartner’s 8.4% decline is the larger swing, the kind of unit loss that empties a PA fab for a quarter. Counterpoint’s 2.1% decline is the smaller swing, painful but absorbable for most suppliers. The gap between the two forecasts is roughly the difference between a difficult year and a rebalancing year. Memory is the variable every analyst names as the cause.

Q3 contract prices hold the call between the two forecasts. The reading on consumer pressure starting to slow AI-driven memory price gains leans toward Counterpoint’s 2.1% as the working number. Gartner’s 8.4% stays in play if Q3 contracts break above the current range. That threshold is the datapoint every supply-chain brief will be measured against from here.

Who’s Eating the Cost and Who’s Walking Away

Counterpoint research director MS Hwang drew the line in the December note carried by CNBC. He framed the cost squeeze as a two-tier problem, with room at the top of the market to absorb the rise and very little room elsewhere. The words sit at the center of where the smartphone industry is dividing in 2026.

Apple and Samsung are best positioned to weather the next few quarters, but it will be tough for others that don’t have as much wiggle room to manage market share versus profit margins.

Coverage of Counterpoint’s Market Monitor reinforces the same shape on the units side. Apple led 2025 with 20% global share and 10% year-on-year shipment growth, the highest among the top five brands. Samsung sat at 19% share and 5% growth, with Xiaomi at 13%. The two top brands sit on the customer base and the pricing power to absorb a component cost rise. The rest do not, and the DIGITIMES brief makes clear that the second tier is already pulling back production.

Counterpoint director of research Tarun Pathak framed the trade-off now playing out across every brand’s product roadmap. The supply crunch will weigh on shipments, per Pathak, with Apple and Samsung resilient on supply chain capabilities and premium market positioning while Chinese original equipment manufacturers in the lower-price segments face greater pressure. That is the same tier the DIGITIMES brief is reporting on, named one layer closer to the brand’s product planner.

The Price Clock Through the Rest of the Year

The next data points on the calendar are not retail. They are the Q2 contract prices that memory suppliers like Samsung and SK Hynix negotiate with handset buyers, due in the next four to six weeks. Counterpoint’s note flags that memory prices could rise another 40% through Q2 2026.

Gartner’s 8.4% smartphone shipment decline sits at the higher end of the possible range, with Counterpoint’s 2.1% at the lower end. For PA vendors, the more useful signal arrives one quarter later, when brands that trimmed low-end inventory in March start rebuilding 2026 product roadmaps. The first wave of cuts is what the supply-chain brief is reporting. The rebuild, or the lack of one, shows up in Q3 supply checks.

Frequently Asked Questions

How long will smartphone memory prices keep rising?

TrendForce has DRAM and NAND contract prices still climbing through Q3 2026, though consumer-side affordability pressure is starting to slow AI-driven price gains. Counterpoint’s standing December forecast has another potential 40% rise through the end of Q2 2026.

Will budget phones disappear from store shelves?

Counterpoint has bill-of-materials cost on phones under $200 up 20% to 30% since the start of 2025, and Gartner expects basic smartphone buyers to leave the market five times faster than premium buyers through 2026. Gartner’s longer-arc forecast has the sub-$500 PC segment disappearing by 2028.

Are Apple and Samsung raising handset prices?

Apple is signaling it will absorb most of the component rise rather than pass it to consumers on the iPhone 17 family, per Counterpoint’s December note. Samsung is the brand considering raising prices, with the Galaxy S26 launch on February 25 as the expected moment.

What is a power amplifier, and why is the supply-chain call focused there?

A power amplifier is an RF front-end component that boosts the cellular radio signal inside a phone. It ships into nearly every smartphone and is sold separately from the application processor and modem, which is why PA suppliers see order cuts the same week handset brands cut low-end production, even though PAs are not the source of the cost squeeze.

Should I buy a phone now or wait?

Forecasts on consumer phone prices for 2026 have risen since last fall. Gartner’s February forecast sits at 13% versus 2025; Counterpoint’s December forecast sits at 6.9% year on year for average selling price. Waiting through this calendar does not guarantee a lower sticker.

This piece draws on a July 9, 2026 DIGITIMES dispatch and on public analyst notes from Gartner and Counterpoint Research.