Offline update then upload files to server
If you're not able to increase your server's memory_limit and/or max_execution_time settings, then your current process is a way to "manually" update Craft 3.

Alternatively, if your server has Composer installed from the command line and you have SSH access, you can perform the composer update locally, then upload your composer.json and composer.lock files, then execute composer install from your project's root.

That method should use less memory than updating from the Control Panel.