Xiaomi Hikes Smartphone Prices: Memory Chip Costs to Blame
Xiaomi is raising prices on some smartphones due to rising component costs.
Top Summary
- What happened: Xiaomi will increase prices by about 200 yuan (US$29) on three smartphone models.
- Why it matters: Rising memory chip prices and strained margins are impacting the consumer electronics market.
- What changes for people: Consumers will face higher prices for select Xiaomi smartphones.
- Who is affected: Xiaomi, its customers, and potentially smaller smartphone brands.
Xiaomi Increases Prices Amid Rising Component Costs
Xiaomi is set to increase prices on select smartphone models, citing a surge in component costs. The price increase, around 200 yuan (US$29), will affect three models starting next Saturday.
According to Xiaomi, memory chips and other essential components have become significantly more expensive. This follows similar price adjustments made by Oppo, Vivo, and Honor in March.
Memory Prices Soar, Squeezing Margins
Lu Weibing, president of Xiaomi’s smartphone business, stated that memory prices for comparable configurations have increased nearly fourfold year-on-year. Industry data confirms memory prices are climbing due to tight supply and strong demand from AI and data centre applications.
This price hike comes as Xiaomi faces increasing pressure on smartphone profits. In Q4 2025, Xiaomi's smartphone gross profit margin fell to 8.3%, down from 12% the previous year.
Smartphone shipments also declined by 2% in 2025, and the average selling price decreased. This combination has reduced Xiaomi's ability to absorb rising component costs. A Xiaomi executive described the jump in memory costs as “beyond imagination.”
The AI Boom's Impact on Memory Supply
The increasing demand for memory in AI and data centre applications is impacting the consumer electronics sector. DRAM makers are shifting capacity towards High Bandwidth Memory (HBM), a faster memory used in AI systems, and server applications. NAND production is also being redirected towards enterprise SSDs.
Large cloud service providers are securing supply through long-term agreements. TrendForce reports that these agreements are contributing to near-term supply constraints.
Lu Weibing said Xiaomi "held on a little longer than others" and described increases as "inevitable."
Potential Market Fallout
A Xiaomi executive warned that a prolonged period of high memory costs could force weaker smartphone brands into substantial losses or even closure. Even with decreased PC DRAM demand forecasts, DRAM suppliers are reducing shipments to PC OEMs and module makers.
Some buyers are paying higher prices, further fueling price increases. The industry faces a challenging environment as component costs continue to rise.
What to Watch Next
It remains to be seen if other smartphone manufacturers will follow suit with price increases. Industry analysts will be closely monitoring the impact of these price hikes on consumer demand and the overall smartphone market in the coming months.