Rising Memory Costs Shake Smartphone Market

The smartphone market is feeling the squeeze from rising memory chip prices, with major brands like Oppo, Vivo, and iQOO hiking prices by 500 to 1,000 yuan ($70 to $140). This marks one of the most significant price adjustments in China's smartphone sector in recent years, driven by pressures in the supply chain.

AI Demand Alters Dynamics

AI infrastructure expansion is the culprit behind this imbalance. TrendForce forecasts a 28% year-on-year growth in global AI server shipments by 2026. As demand for DRAM and NAND flash surges, memory manufacturers are prioritizing high-bandwidth and server products over consumer-grade chips.

Micron Technology and SK Hynix highlight AI applications as primary growth drivers. This strategic focus is leading to a scarcity of consumer-grade memory, pushing prices higher. TrendForce anticipates that memory prices will continue their upward trajectory into 2026.

Cost Pressures on Smartphones

The increasing memory prices are putting substantial cost pressures on smartphone manufacturers. Memory now constitutes a larger portion of a device's bill of materials, influencing end-user pricing strategies. Counterpoint Research indicates that these rising costs are squeezing margins, especially for mid- and low-end models. Some brands respond with price hikes or adjustments in product offerings.

Contract prices for DRAM and NAND flash have been on the rise since late 2025, further burdening manufacturers. This cost increase is forcing consumers to rethink their purchasing decisions.

Market Shifts and Consumer Behavior

In response to these challenges, major smartphone brands are pivoting towards premiumization and optimizing their product mix to mitigate risks. Honor, for instance, maintains its base price for the Magic V6 foldable but increases prices for models with higher storage. Xiaomi's President, Lu Weibing, warns that memory cost pressures are unlikely to ease soon.

As the global smartphone market remains uncertain, average selling prices are expected to rise. The industry's consolidation continues, with leading players gaining more market share as smaller brands struggle.

Consumers, wary of price hikes, are becoming more cautious. Government subsidies offer some relief, but with global shipments projected to fall by 13% in 2026 (IDC), higher prices could stifle demand. Will consumers buy now to avoid future increases, or will they wait, hoping for a post-2027 respite in memory supply?