Rising component costs are quietly reshaping the cheap end of the American smartphone market in ways most people didn’t see coming a year ago. The ultra-affordable segment is thinning out fast, leaving fewer choices for buyers on a tight budget.
According to Counterpoint Research, sales of phones under $100 in the US dropped 64% year-over-year in the second quarter of 2026. That put volume in the segment at roughly one-third of what it was a year earlier. The main culprit? Skyrocketing memory chip prices.
Manufacturers have been forced to either raise retail prices or just stop shipping the cheapest models. Memory and storage now eat up a much bigger chunk of the bill of materials on budget phones, so the old rock-bottom price points are getting harder to hit.
Overall US smartphone sales fell 5% in the quarter. The top four brands, Apple, Samsung, Motorola, and Google, only dropped about 4% combined. Everyone else? Their sales plunged 45%. Smaller and niche players that depended on thin margins from low-cost devices are feeling the heat the most. Some, like HMD, had already pulled back or left the US market last year because of weakness in the prepaid channel and tariff uncertainty. Higher memory and storage costs have only made things tougher.
Prepaid smartphone sales themselves were down 11% year-over-year. But inside that shrinking channel, Samsung and Motorola actually gained ground. Samsung’s share of the US prepaid market jumped nine percentage points to 47%, while Motorola picked up four points to hit 32%. Carriers are leaning harder on Samsung’s Galaxy A series and Motorola’s Moto G lineup to keep customers as the cheaper alternatives disappear. With fewer options left, the prepaid space has pretty much narrowed down to these two brands.
The end result: the cheapest phones are becoming harder to find and more expensive. As long as memory costs stay high, that pressure on the budget tier isn’t going away anytime soon.
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(Source: Counterpoint Research)
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