The shift in low-cost phone volume
Bargain-basement handsets are getting harder to find. Worldwide shipments of sub-$100 handsets reached 173 million over the prior year, according to IDC. By Q2 2026, shipments in that bracket were down nearly 60% compared with the same quarter a year earlier.
Xiaomi is a case study in the pivot: under-$100 models were 27.7% of its global shipments in the first half of 2025 and dropped to 11.2% a year later. The retrenchment is not just at the very bottom either. IDC also notes Xiaomi's under-$200 mix slipped to 52.5% from 60% over the same period.
Why memory is driving prices
AI is hogging the buffet. Chipmakers have been steering output toward higher value parts for AI infrastructure, limiting supply for components used in smartphones and pushing costs higher. Omdia's Chow Sheng Win reports that, in sub-$200 phones, memory now accounts for nearly 60% of the bill of materials. IDC's Bryan Ma puts it plainly: "Low-end phones are becoming uneconomic to manufacture."
How companies are reacting
To protect margins, Chinese brands are climbing the price ladder and pruning ultra-cheap models, which nudges overall market price points higher. Counterpoint Research's Neil Shah estimates Xiaomi's average selling price has climbed about 30% since 2023 to $197, with Oppo up by a similar share to around $300. Within mainland China, Chow notes that less than 20% of Xiaomi's volume now sits below $200.
That shift toward costlier models surfaced this week when Xiaomi introduced the higher-end 18 Fold with a starting price of 10,999 yuan ($1,640), targeting the premium segment. A response from Xiaomi was not immediately available to a request for comment made outside regular business hours.
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Chinese vendors can offset some of the hardware squeeze with healthy internet services and app revenue at home. But a price rollback looks unlikely. Shah argues that a reversion to 2024 or early-2025 pricing is unlikely, since memory producers have scant motivation to expand capacity for the low end. Ma adds that even if supply pressures ease, "that just means that the price increases moderate," not reverse.
What this means for your money
The headline takeaway: prices are unlikely to retreat, and any easing would only moderate increases.
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