Memory costs push consumers towards pricier smartphones

Rising DRAM and NAND memory component costs helped drive a 12 per cent year-on-year decline in Latin America’s smartphone market in the second quarter of 2026, with cheaper devices bearing the brunt of higher retail prices, according to research firm Omdia. The region’s smartphone shipments fell to 30.3 million units in the three months to June, as higher memory costs fed through to device prices and weakened demand, particularly among consumers looking for entry-level handsets. Vendors and sales channels had partly absorbed the impact during the first quarter through earlier shipments and inventory buffers, but those protections weakened in the second quarter, leaving the lower end of the market more exposed. The pressure was considerably less severe in mid-range, high-end and premium smartphones, where demand proved more resilient. Memory costs were therefore a key factor behind the widening divide between cheaper and more expensive smartphones, as manufacturers faced higher component expenses while consumers became more cautious about spending. Samsung remained the region’s largest smartphone vendor, shipping 12.0 million units, an increase of 9 per cent year-on-year, and raising its market share to 39 per cent, its highest level since the first quarter of 2022. Its performance was led by the entry-level Galaxy A07 and A17 and the mid-range A37 and A57, with Omdia pointing to Samsung’s relatively lower exposure to memory component shortages and its strong relationships with sales channels as factors supporting its growth. Xiaomi ranked second with 4.9 million units and a 16 per cent market share, although its shipments fell 27 per cent year-on-year. The company’s high-end and premium devices reached a record 14 per cent of its sales mix, but this was not enough to offset declines across price categories below US$500, which still represented 85 per cent of its sales. Motorola was third with 4.4 million units and a 14 per cent market share after shipments fell 15 per cent year-on-year. Its high-end and premium portfolio grew 46 per cent, led by the Edge 70 and Razr 70 series, but this growth could not compensate for weaker sales across the remainder of its range. HONOR ranked fourth with 2.0 million units and a 6.5 per cent share after shipments declined 32 per cent year-on-year. The decline marked the vendor’s first contraction since its official launch in Latin America in the fourth quarter of 2021, with weaker sales across most price categories outweighing growth from entry-level models such as the Play 10 and X5c. High-end devices nevertheless increased their contribution to HONOR’s sales, accounting for 12 per cent of its mix, driven by the Magic 8 and HONOR 600 series. TRANSSION returned to fifth place with 2.0 million units and a 6.4 per cent market share despite a 19 per cent year-on-year fall in shipments. The vendor continued reducing its reliance on entry-level devices and expanded its presence in the US$200-US$500 segment, which accounted for 32 per cent of its shipments. Growth in that category was led by the Infinix Hot 70, Note 60 and Edge series. “The current environment is testing vendors’ ability to adapt, from managing supply chain risks and reducing exposure to lower-end segments to refining their product portfolios and strengthening channel relationships,” said Miguel Ángel Pérez, senior analyst at Omdia. The impact of component costs was particularly visible across smartphone price bands during the second quarter. Shipments of smartphones priced below $100 plunged 72 per cent year-on-year, sharply reducing the category’s contribution to both market volume and value. The US$100-US$300 segment declined 6 per cent but remained Latin America’s largest by volume, accounting for 61 per cent of all shipments. At the same time, smartphones priced above US$500 increased their share to 18 per cent of shipments and generated 51 per cent of the region’s total smartphone market value. The shift towards more expensive devices was supported by wider access to financing, allowing consumers to spread the cost of higher-value smartphones. Vendors have increasingly sought to strengthen the value offered by mid-range devices while making premium models more accessible through discounts, bundles, interest-free instalments, trade-in programmes and leasing options. Central America was among the hardest-hit parts of the region in the second quarter after several years of steady smartphone market growth. The subregion became Latin America’s third-largest smartphone market in 2024, but its heavy reliance on cheaper devices left it particularly exposed to rising component costs and higher retail prices. Smartphones priced below US$300 accounted for 84 per cent of Central American shipments in 2025, contributing to a 22 per cent year-on-year contraction in the second quarter of 2026 as demand for lower-priced devices weakened sharply. Omdia now expects Latin America’s smartphone market to contract 16 per cent in 2026 compared with 2025, with the decline forecast to deepen during the second half of the year. Entry-level smartphones are expected to remain under pressure from higher prices and constrained specifications, while competition is also set to intensify in the mid-range and upper mid-range categories. The effect of higher component and manufacturing costs was already reflected in retail pricing during the second quarter, when the region’s average selling price rose 25 per cent year-on-year. The trend has wider implications for smartphone buyers globally, as rising memory component costs threaten to push up handset prices and make device upgrades more expensive across markets. Omdia said the configurations of the components used in devices and the product references, or SKUs, for the remainder of the year had already largely been determined. As a result, fluctuations in memory costs are unlikely to reverse the expected market contraction in the second half of 2026. Consumer reaction to higher smartphone prices and the resulting increase in average selling prices will therefore be crucial to determining how the market performs. Sales channels are also tightening inventory controls as consumers become more cautious about replacing their devices. This is expected to put greater emphasis on disciplined shipments into retail channels, targeted promotions and efficient execution at the point of sale. Clear product messaging and effective execution by retailers and mobile operators, supported by digital sales strategies, will also be important in converting remaining consumer interest into actual purchases. For manufacturers, the combination of higher DRAM and NAND costs, weaker entry-level demand and already-defined product specifications leaves limited room to absorb further increases without affecting either prices or margins. The result is a smartphone market increasingly shifting towards higher-value devices, even as the rising cost of the components inside those devices puts pressure on overall demand.