Rising memory prices are shrinking the sub-$400 Android market, and Apple is the relative winner

Smartphones priced below $400 are down more than 22% year-over-year in 2026, according to Omdia data reported by 9to5Mac on July 9 2026. The cause is rising memory costs, which have hit Android makers disproportionately hard. Apple's higher average selling price (ASP) and tighter bill-of-materials control make it relatively better positioned for the new pricing environment.

The dynamic is the inverse of what most Apple-versus-Android coverage assumes. Apple's 2026 price increases look bad in isolation, but they are happening in a market where the cheap-Android segment is collapsing for the same underlying reason.

What Omdia actually said

Omdia's consumer team notes two specific findings:

1. Smartphones priced below $400 are down over 22% YoY in 2026, driven by the memory cost burden on mid-to-low-end smartphones.
2. The situation will worsen as memory prices continue to rise in the coming quarters. Omdia says "low-end products are already becoming unprofitable and face a high risk of weakening demand as retail price continues to rise. As a result, smartphone vendors are proactively and gradually retreating from [the sub-$400 segment]."

The Omdia framing is direct: as memory prices rise, vendors who make phones for less than $400 either sell at a loss, raise prices and exit the segment, or accept shrinking volumes. The first two options dominate — Android makers are pulling back from the bottom of the market.

Why Android is hit harder than Apple

The asymmetry comes from how memory cost scales with the rest of the phone:

• On a $200-$300 Android phone, memory (RAM + storage) accounts for roughly 12-18% of the bill of materials. A 30-40% increase in memory pricing translates to a 4-7% increase in the total BOM, which is the entire gross margin on a sub-$400 device.
• On an $800-$1,300 iPhone, memory accounts for roughly 8-12% of the bill of materials. The same memory cost increase translates to a 2-4% increase in total BOM, which Apple can absorb or pass through selectively.

Android makers in the sub-$400 segment cannot absorb the increase — they do not have the margin headroom. Apple can absorb it because the iPhone 18 base is held at $799 specifically because Apple has structural cost advantages (the A20 chip and C2 modem are cheaper than their predecessors).

This is consistent with Counterpoint's iPhone 18 Pro Max BOM report from the same week, which noted that the 1TB Pro Max's BOM will rise by nearly $300, but that Apple is planning uneven price increases across storage tiers to protect the high-capacity models' margins.

What this means for Apple

Three practical implications:

1. The price-differential argument is shifting. Historically, Apple's premium pricing was justified by quality, brand, and ecosystem. The 2026 dynamic adds a structural reason: as cheap Android phones become more expensive or disappear, the price gap between Android and iPhone narrows from below. An iPhone 18e at $649 looks less expensive when the comparable Samsung Galaxy A-series phone is also pushing toward $500-$550 due to memory costs.
2. Apple's volume strategy on the iPhone 18 base is validated. The earlier apple-price-increase-2026-explained analysis noted that Apple held the iPhone 18 base at $799 partly to defend unit volumes in price-sensitive markets. With the sub-$400 Android segment collapsing, Apple's $799 entry point is now structurally well-positioned — it sits above the collapsing bottom of the market but well below the $1,000+ premium tier where Apple has less competition.
3. Apple benefits from brand pull as the budget-Android alternatives disappear. Users who would have bought a $300-$400 Android phone are being pushed into the $500-$700 segment. Some will choose the iPhone 16e (now $429-$499 in Apple's lineup after the iPhone 18e launched) or the iPhone 18e ($649) over a comparably priced Android phone, because Apple's brand and ecosystem justify the small premium.

How big is the effect?

The 22% YoY decline in sub-$400 Android shipments is a real shift. For context:

• The sub-$400 Android segment represented roughly 35-40% of global smartphone shipments in 2024.
• A 22% YoY decline in 2026 means the segment is roughly 27-31% of 2026 shipments.
• That is a structural shift of 8-10 percentage points of global volume moving out of the bottom tier.

Where does that volume go? Some of it disappears (users keep older phones longer). Some of it goes to the $400-$700 mid-tier Android segment (which is also pressured but not collapsing). And some of it goes to the used and refurbished market, where older iPhones compete with new mid-tier Android.

The net for Apple: the iPhone 16e and iPhone 18e become more attractive relative to the alternatives. Apple's share of the $400-$700 segment may grow in 2026-2027 even as Apple's overall volume grows modestly, because the segment itself is growing relative to the sub-$400 segment.

What this does NOT mean

A few caveats so this isn't over-claimed:

• Apple is not winning because of its pricing strategy in isolation. Apple is winning relatively because Android makers have less room to maneuver on memory costs than Apple does.
• The 22% decline in sub-$400 Android does not mean Apple is taking all of that share. Most of it is leaving the smartphone market entirely (longer upgrade cycles) or going to refurbished devices.
• The memory cost dynamic could reverse. Omdia's framing is that memory costs will continue to rise "in the coming quarters," but memory is a cyclical market. If AI-server demand cools or new fab capacity comes online in 2027, memory prices could stabilize, and the Android sub-$400 segment could recover.

What to watch

Three things to monitor:

1. Memory pricing trajectory in Q3-Q4 2026. If Omdia's forecast holds and memory prices keep rising, Apple's relative competitive position strengthens further.
2. Whether Android makers formally exit the sub-$400 segment. Several Chinese brands (Transsion, Realme, some Xiaomi sub-brands) are most exposed. If any of them formally pull back from specific markets, that is a clear signal the segment is collapsing.
3. Apple's iPhone 16e and iPhone 18e unit sales. If Apple's mid-tier iPhone volumes grow in 2026-2027, that would be direct evidence that the budget-Android collapse is being absorbed at least partly by Apple.

The mid-2026 smartphone market is becoming more stratified: premium Apple and Samsung at the top, mid-tier Android in the middle, and a shrinking low-cost Android tier at the bottom. The dynamic favors Apple's positioning in the $400-$800 segment more than it hurts Apple's premium positioning.