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The cheapest phones in America are vanishing, and AI is the reason.
In the US, sales of phones under $100 fell 64% from a year earlier in the spring, according to Counterpoint Research. Worldwide, IDC now expects 2026 to be the worst year for phone sales on record: down about 17%, the steepest drop it has ever measured. The average phone now sells for about $581, up roughly 28% in one year.
IDC’s lead phone analyst, Francisco Jeronimo, put it bluntly: “the era of the cheap smartphone has ended.”
Why AI is doing this
Every phone and laptop needs memory chips. So does every AI data center, and the data centers need far more, plus a special high-end kind (called HBM) that sits right next to the AI chips. Memory makers can only build so many chips, and AI companies pay more. So the factories shifted. HBM went from about 2% of memory production in 2023 to a projected 20% by the end of this year. Micron, one of the three big memory makers, shut down its consumer brand, Crucial, last December to focus on AI customers.
The result: memory prices for phones and computers are up more than 300% from a year ago, per IDC.
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Why cheap phones get hit hardest
In a $1,200 iPhone, memory is a slice of the cost. In a $99 phone, Counterpoint says memory now makes up more than half of what goes into it. There’s no room left to absorb a tripled price, so those phones either disappear or move up. Motorola’s popular budget G-series is now selling mostly in the $200 to $299 range.
Laptops are on the same path. Dell raised laptop prices 15 to 20% last December, and Gartner has warned that PCs under $500 could disappear by 2028.
What it means for you
Don’t wait for prices to drop. IDC expects the memory squeeze to last until at least 2028. If you need a phone or laptop now, waiting a year probably means paying more, not less.
Make what you have last. A new battery and a case are a lot cheaper than a new phone this year.
Look at refurbished. Last year’s flagship, refurbished, often beats this year’s budget model on both price and memory.
Check the memory, not just the price. Some new phones are shipping with less memory than last year’s model at a higher price. Compare the specs before you buy.
The bigger picture
For two years, AI’s cost has been a story about billions of dollars and power plants. This is where it reaches your wallet directly. The companies building AI can outbid you for the same chips, and right now they are.
On the site: a chart of how memory prices moved, the source behind every number, and a copy-paste prompt that helps you decide whether to repair, buy refurbished, or buy new.
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— Jerry
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