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Phone manufacturers are looking into new ways to balance component prices by using cheaper camera setups to offset rising RAM and storage costs. Brands are deliberately downgrading from high-end camera sensors to more affordable alternatives as a mitigation strategy, insiders report.The global smartphone industry is experiencing the worst memory shortage in history. DRAM and NAND prices have skyrocketed in recent months, driven by high demand from AI data centers. Memory chip prices nearly doubled in Q1 2026 alone, and analysts predict costs will rise another 40% in Q2 2026. A phone’s SoC used to cost much more than RAM and storage, but now, for flagship devices with 16GB LPDDR5X RAM and 1TB UFS 4.1 storage, these components cost more than Qualcomm’s flagship Snapdragon 8 Elite Gen 5 chipset, Wccftech reports. According to a Fixed Focus Digital post on Weibo, manufacturers are desperate to lower the cost per unit, which could mean installing lower-quality camera sensors.This makes sense because camera hardware accounts for less than 15% of a flagship smartphone’s bill of materials, compared to 25-30% for displays and processors. The price difference between premium and mid-tier camera sensors is small compared to the cost of memory. And since improvements in computational photography have narrowed the gap in image quality, a slightly worse camera setup shouldn’t be a big issue, except for smartphone photography enthusiasts.To compensate for cheaper camera hardware, manufacturers are reportedly investing in software engineering aimed at developing imaging algorithms. Companies like Samsung and Google already use identical sensors across flagship models, differentiating primarily through software improvements. The global smartphone market is projected to decline 12.9% in 2026 to 1.12 billion units as rising component costs force price increases that dampen consumer demand.
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