• Low-end: In Q2 2026, the component cost of the models in similar configurations increased 70% YoY, and almost all of this was driven by memory. Smartphone OEMs have significantly cut orders for entry-level products and adjusted their portfolios to defend against the short-term risk of profit losses.
• Mid-end: The BoM cost increased by 52% YoY in Q2 2026.  Memory’s cost took 40% of the overall BoM cost. In this segment, the superior configurations in processors and camera systems are decreasing.
• Premium: In Q2, the segment’s BOM cost has also increased nearly 50% YoY. DRAM surpassed the SoC, became the most expensive single component in a premium smartphone. The rise in starting retail price spread to the premium segment in Q2. 

Premium smartphone BoM Cost Share Trend

*The DRAM is selected as LPDDR5X 16GB, and the NAND is chosen as UFS4.1 512GB. SoC is selected as Qualcomm Snapdragon 8 Elite series or MediaTek D9000 series. Display is selected as a flagship QHD+ LTPO OLED screen. Cameras are selected as premium triple-camera configurations.

Senior Analyst Shenghao Bai commented, “For mid-to-low-end smartphones, although OEMs have optimized their product portfolios to mitigate cost pressures, they will continue to face risks of margin compression and potential losses for certain models. Meanwhile, the continued increase in flagship smartphone BOM costs is also slowing the pace of technology adoption in areas such as displays and imaging systems.”

For models equipped with higher-capacity NAND storage, the increase in BOM costs is expected to be more significant. The 1TB iPhone 18 Pro Max is estimated to see a nearly $300 BOM cost increase compared to the equivalent iPhone 17 Pro Max, which was launched last year. Smartphone OEMs are likely to adopt differentiated pricing strategies across different storage tiers to balance rising component costs and consumer demand. Meanwhile, some OEMs are expected to adopt more cost-optimized NAND solutions for high-capacity variants to control BOM increases and limit the extent of retail price hikes.

Shenghao Bai added, “The adoption of 2nm flagship SoCs in future generations will further drive up BOM costs for next-generation flagship smartphones. Even with retail price increases, we expect overall gross margins to remain slightly below those of equivalent flagship models launched in 2025.”

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