The AI boom has triggered a surge in memory chip prices, now spreading from upstream supply chains to the smartphone market.
Smartphone memory chip procurement costs have surged over 80% year-on-year, prompting industry leaders including OPPO, Xiaomi, vivo, and Honor to initiate price adjustments. The new pricing cycle is expected to launch in early March, potentially marking the most significant collective price hike in the smartphone industry in five years.
The recent surge in memory prices stems from structural supply-demand imbalances. AI model training and inference generate massive computational demands, with a single AI server's DRAM usage being 8-10 times higher than conventional servers. As tech giants like Microsoft and Google lock in billions in capital expenditures for high-end production capacity, consumer-grade memory supplies face severe constraints.Meanwhile, industry giants including Samsung and SK Hynix have redirected over 70% of their advanced production capacity to high-margin AI storage products like HBM, further reducing the supply of chips such as DDR4 and LPDDR4 for smartphones.
The combination of supply contraction and inventory shortages has directly driven memory prices to skyrocket across the board.In Q1 2026, general-purpose DRAM contract prices surged 55%-60% quarter-on-quarter, while NAND flash memory prices rose 33%-38%, with select consumer-grade products seeing over 40% increases.SK Hynix also stated this in late February.No customer demand has been met, and inventory levels have plummeted to historic lows.
Rising upstream costs have directly squeezed smartphone manufacturers' profits, with mid-to-low-end models being hit hardest. Memory costs now account for over 30% of mid-range phone material costs, a sharp increase from 10%-15% previously. Some budget models even operate at negative gross margins.
Faced with high costs, manufacturers have begun to take countermeasures.Beyond announcing price hikes, some brands have quietly revamped their product strategies: slashing basic memory specs, reintroducing MicroSD card slots for expandable storage, and ramping up high-end models to cushion the cost pressure.Currently, new models from brands like Redmi and iQOO have seen price hikes of 100-600 yuan compared to their predecessors, with mid-range models experiencing the steepest price increases of up to 20%.
Industry analysts predict that the current memory price surge cycle may persist until late 2026 or even 2027, with prices unlikely to drop in the near term.For consumers, the upcoming period of mobile phone purchases may present choices between 'price hikes' or 'same-price but lower-spec models.' For the industry, this wave of price increases, driven by cost pressures, is likely to push manufacturers toward premiumization and differentiation. Domestic memory chips are also poised to gain more substitution opportunities during this transition.
