How undergraduate research area affects Ph.D. admission chances?
Put simply: No.

Your undergraduate thesis work need not have any connection with your graduate research. Certainly, staying in the same area lets you have more of a "running start," but there's always the chance that you find a new research project as a graduate student that grabs your attention and doesn't let go. 

So don't worry too much about doing research work in a less competitive area unless you want to do that research anyway. It's better to do work that excites and motivates you, because the end product will almost certainly be better than taking a project that doesn't.