In Depth: China’s Smartphones Get Pricier as AI Strains Chip Supply
Caixin Global · Yang Zirui; Gu Zhaowei Published Oct ·
As data centers absorb memory supply and component costs climb, manufacturers are raising prices across their lineups and retreating from the budget end of the market
1. Leading smartphone-makers including Apple Inc., Huawei Technologies Co. Ltd., and Xiaomi Corp. have increased prices across much of their new flagship lineups ahead of China’s National Day holiday, a departure from the previous norm of offering more powerful devices at broadly stable prices [para. 1]. Specifically, Xiaomi’s 18 Pro starts at 5,999 yuan ($896), up 1,000 yuan, while Huawei’s Mate 90 standard model is nearly 28% more expensive, and the 2-terabyte version of the iPhone 18 Pro Max costs 3,500 yuan more than its predecessor [para. 2]. Local manufacturers are also emphasizing premium versions, offering fewer low-end options, and raising prices on existing phones instead of discounting older models [para. 3].
2. The underlying driver is a supply-chain squeeze caused by the artificial intelligence boom, as data center operators compete for memory chips, pushing up costs for consumer-electronics makers [para. 4]. TrendForce data shows server DRAM contract prices rising about 64% cumulatively in the second half of 2025, with a further cumulative increase of about 270% projected for 2026, while suppliers prioritize AI data centers over consumer electronics [para. 8]. Qualcomm China Chairman Frank Meng noted he has never seen memory prices increase four or five times in a year, conservatively estimating that no significant increases will occur by the end of 2027, but high prices will continue for some time [para. 9]. This impact is particularly severe for cheaper phones, with Omdia estimating that memory accounted for nearly 60% of the bill of materials for phones priced below $400 in the first quarter of 2026 [para. 10].
3. The timing is difficult as China’s market contracts, leaving less room to absorb increases or persuade consumers to pay more [para. 5]. Consequently, cheaper phones are becoming harder to produce profitably, and premium devices are taking on greater importance [para. 6]. Counterpoint reports that more than 40% of smartphone models have seen price increases this year, lifting the global average retail price by 15%, with some models up nearly 100%, while China’s retail increase has been more moderate at about 10% [para. 11][para. 12]. Demand is weakening, as China’s smartphone shipments reached about 66 million units in the second quarter of 2026, down 4.3% from a year earlier, marking the fifth consecutive quarterly decline, with a double-digit decline projected for the year [para. 14].
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