"Memory Skyrocketing" for 100 Days, Low-End Phones Forced to Death

Everyone has seen it: Xiaomi said that raising prices “hurts,” and Transsion, Lenovo, OPPO, and vivo have all followed suit with price hikes.

The entire consumer electronics industry is trying to offset the erosion of profits caused by rising memory costs through price increases. Soon, the impact of these price hikes has been transmitted to the consumer end.

“I bought a lifetime warranty memory stick that encountered issues, but after nearly a month of customer service, there’s no substantial progress,” a consumer wrote in an email, but faced the dilemma of customer service saying it cannot be repaired or replaced, only refunded.

Consumers demand lifetime warranties, but platforms are only willing to process refunds. This is a fulfillment conflict caused by the surge in memory prices, and the key lies in the word “surge.”

On social media, comments sections on major e-commerce platforms are filled with discussions about memory prices doubling, with storage becoming a “yearly financial product,” jokingly called electronic gold by the industry. Meanwhile, the soaring product prices are also hurting “cyber players” and consumer electronics manufacturers.

According to Xiaomi President Lu Weibing, in Q1 2026, memory prices increased by approximately 400% year-over-year, soaring from $30 to over $120.

A founder of a mini PC brand said, “Costs were already high, and with storage prices rising, prices just shot up. ‘It used to be considered expensive,’ now customers just don’t look at it. They don’t care how big your memory and hard drives are.”

The storage war between AI giants and mobile phone camps. Image generated by AI.

01 Memory Surge, Even Apple Can’t Handle It

Among Chinese phone manufacturers, Transsion, known as the “King of African Phones,” was the first to feel the chill of storage price hikes.

“Everyone is feeling the pressure—costs, selling prices, budgets—all are directly affected,” said an internal source at Transsion when asked about the impact of rising storage costs.

Previously, in Transsion’s 2025 performance report, it stated that due to supply chain costs, the prices of components like storage had increased significantly, impacting the company’s product costs and gross margins, leading to a decline in overall gross profit margin during the reporting period.

“Last year, its stock price fell so much because the market said Transsion had no stock—not because of price issues, but because of stock shortages,” emphasized a researcher tracking the storage industry, noting that Transsion no longer has memory inventory, though this has not been further confirmed by Tencent Tech.

Xiaomi’s President Lu Weibing quantified the craziness of memory price hikes at MWC.

Lu Weibing revealed that in Q1 this year, memory prices were about four times higher than in the same quarter last year—“a 12GB+256GB memory combo, which was around $30 at its lowest, now costs about $120-130 with the fourfold increase.”

The storage dilemma, whether for domestic phones or giants like Apple, is unresolvable.

At the recent Q1 earnings call, Tim Cook mentioned two major uncertainties regarding the supply chain. Ming-Chi Kuo summarized them as supply constraints and cost pressures, with the former related to advanced process nodes for SoCs, and the latter mainly affecting memory procurement.

“We are limited by the availability of advanced nodes, which are the foundation of our system chips. From the memory perspective, the impact on Q1 was small, but it is expected to have a greater effect on gross margins in Q2,” Cook said.

What does this mean? Cook indicated that Apple fears TSMC’s capacity for advanced processes might be insufficient to meet chip delivery demands. The rising memory prices are just eroding margins; in other words, they are not worried about memory supply.

A noteworthy detail about Apple’s storage demand is that, since iPhones use DRAM and NAND accounting for 20-25% of the mobile storage market, Apple has not classified storage as a supply constraint. Kuo believes this is a positive for non-AI storage products—it indicates supply has eased.

However, investor Chen Qi, who has long followed the semiconductor industry, believes Apple’s ability to “secure supply” mainly hinges on its strong cash flow. “Apple has a robust cash reserve and high profit margins. Even if Samsung raises prices by 100%, they can still confidently agree because having money means capturing market share.”

But even Apple, as strong as it is, has to make concessions in a seller’s market for storage. A researcher from the storage industry revealed that last year, when it was a buyer’s market, companies signed long-term supply contracts with memory manufacturers; now, they are switching to quarterly agreements.

Overall, whether supply eases or not, memory price hikes have a direct impact on the gross margins of mobile phones and PCs.

02 Mobile and PC Price Hikes Follow Suit

Memory price increases are impacting consumer electronics manufacturers on a quarterly basis.

Kuo predicted that iPhone storage prices are negotiated quarterly, and prices are expected to rise again in Q2 2026. “Currently, the quarter-over-quarter increase in Q2 is similar to that in Q1,” he said.

Similar trends are happening at Lenovo.

In late November 2025, Lenovo announced it had signed long-term supply contracts with key component suppliers to cope with the continuous rise in storage chip prices driven by soaring AI demand.

“We’ve secured the best deals with core suppliers to ensure sufficient supply next year,” Yang Yuanqing said during the Q2 earnings call.

A quarter later, Blue Whale News reported that, amid the recent surge in memory prices, Lenovo had issued price adjustment notices to its channel partners, deciding to raise prices on some of its computer products.

“I feel Lenovo can’t avoid this big storage cycle. Huawei raised prices in Q4 last year—they were a quarter late, probably just stockpiling for an extra quarter,” said an investor who attended Lenovo’s TechWorld event in Hong Kong.

As inventory levels decline and memory prices stay high, the most direct response from terminal brands is to raise prices, passing the cost pressure onto consumers, which explains the earlier mention of various phone manufacturers announcing price hikes.

Of course, for certain brands, price increases are also driven by other factors. An internal source at Transsion said that price hikes are also influenced by regional and geopolitical factors, emphasizing that the company’s base pricing is annual, with regional adjustments based on local conditions. “The Middle East is also struggling—sometimes logistics are a problem. At this MWC, many Middle Eastern clients couldn’t even fly out.”

For consumer electronics brands, memory is a factor but not the decisive one—they still need to bring products to market. A supply chain insider said, “At this stage, customers are no longer sensitive to prices; they mainly care whether supply is stable.”

However, following the trend of price hikes can also harm terminal brands passively.

At the February earnings call, SMIC’s co-CEO Zhao Haijun said that strong AI demand for storage has squeezed supply for other applications like mobile phones, especially in the mid-to-low-end segments, causing terminal manufacturers to face shortages and price pressures on storage chips. “Even if terminal manufacturers adjust prices to absorb cost increases, it could lead to reduced demand for their products.”

03 Low-end Devices Face Extinction

Rising prices erode margins and threaten the survival of low-end devices.

Counterpoint’s recent “Storage Price Tracking Report” shows that in Q1 2026, DRAM prices increased over 50% quarter-over-quarter, and NAND prices surged over 90%.

For low-end devices priced below $200 wholesale, with unchanged costs, a configuration of 6GB LPDDR4X + 128GB eMMC storage will increase material costs by about 25% quarter-over-quarter, with storage accounting for as much as 43% of the total bill of materials.

“Rising storage prices are causing structural impacts on smartphone BOM costs,” emphasized Counterpoint senior analyst Shenghao Bai.

This structural change hits low-end devices most directly—selling one means losing money in the short term.

Therefore, without considering market share strategies that involve losses, the most straightforward response is to cut back on low-end shipments or even eliminate product lines.

A researcher tracking the storage industry revealed that some domestic manufacturers have already stopped producing entry-level models. “Once inventory is sold out, they won’t produce again in the short term.”

Besides trimming product lines, another solution mentioned by supply chain insiders is hardware configuration adjustments.

“Big manufacturers can push R&D to optimize costs,” the insider said, emphasizing that adjusting parameters during R&D—without sacrificing performance—can help balance the increased storage costs. This approach is also mentioned in Counterpoint’s report, summarized as specification optimization.

However, Counterpoint pointed out that given the surge in storage prices, traditional cost-cutting measures are insufficient. They estimate that retail prices for low-end products will rise by about $30.

“Companies are really struggling now. If they raise prices, they lose sales; if they keep prices low, they lose money. It’s a tough situation,” said a mini PC startup founder.

04 Storage Will Never Be the Same

Lu Weibing’s forecast indicates that storage prices will continue rising until the end of 2027.

Counterpoint analyst Shenghao Bai also expressed a pessimistic outlook: “Short-term relief is unlikely; 2027 might be the earliest window for stabilization.”

Investor Chen Qi said that buying at previous prices might only be possible by 2027. He emphasized that storage prices are unlikely to quickly fall in the short term, as external pressures remain high, and capital confidence in AI is uncertain. “The key depends on whether Middle Eastern capital continues to invest in data centers and keep funding AI companies.”

This circles back to the background of rising storage prices—AI demand is squeezing normal consumer needs.

Since late 2025, some manufacturers have aggressively increased capacity to support the storage demands driven by AI inference surges, further squeezing consumer-grade AI storage. Major players like Micron have even cut back on support for consumer markets, almost fully shifting toward AI.

“Overseas giants definitely won’t care about consumer-grade; they’ll produce whatever is profitable, shifting capacity to HBM. For the domestic market, it’s purely commercial,” said a supply chain insider.

He also emphasized that domestic storage manufacturers have a dual task: to meet market trends and to ensure supply for domestic clients.

But if we look at market-driven factors, even aggressive overseas giants like Micron could become supply regulators.

“Micron isn’t supplying NVIDIA’s HBM4, and their DDR5 profits aren’t much lower than HBM,” said a researcher.

However, the likelihood that GPU manufacturers will adjust demand to release more storage capacity is slim—NVIDIA’s Jensen Huang has publicly stated that the capacity they want for storage is what they will get, and they are actively negotiating with Samsung for HBM.

NVIDIA and AMD are demanding as much storage as needed, including HBM based on DRAM, as well as NAND storage driven by inference tasks like programming, OpenCL, and other AI workloads.

“KVCache storage, user context history, RAG—these are old topics, but once agents are involved, storage needs grow exponentially,” said a domestic AI industry insider. “Since the release of Anthropic’s Sonnet 4.5, capabilities like coding and agent/tool integration have greatly improved. Plus, the AI boom is still fermenting and expanding.”

Even though industry expectations suggest storage prices might recover around 2027 or 2028, ongoing AI demand expansion and the lack of support from storage manufacturers for the consumer market mean storage industry will never return to its previous state. As investor Chen Qi said, unless capital stops betting on AI.

There’s also the possibility that this will only happen when the AI bubble bursts.

Source: Tencent Tech

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