Prices have surged, with some products increasing by 102% in a month. Several smartphone manufacturers have suspended purchases, and some inventories are insufficient for less than three weeks! Analysts say, "Low-end devices may incur more losses," and the price increase is surprisingly due to AI?

Since the second half of 2025, the global memory chip industry has experienced a rare surge, with the momentum intensifying as it entered the fourth quarter. Taking the mainstream DDR5 (the latest product of mature process technology in the DRAM industry) specification of 16Gb chips as an example, the price at the end of September was $7.68, but just a month later, the price jumped to $15.5, with a monthly increase of as much as 102%; the increase for DDR4 16Gb also exceeded 92%. Due to the rapid price increase, memory manufacturers such as Samsung, SK Hynix, and Micron even temporarily suspended their quotes.

Intensive price hikes from upstream quickly transmitted downstream, significantly impacting the consumer electronics industry represented by smartphones.

Recently, Jiemian News reported that multiple smartphone manufacturers have already postponed their procurement of memory chips for this quarter. Manufacturers like Xiaomi, OPPO, and vivo generally have inventory levels below two months, with some manufacturers' DRAM (Dynamic Random Access Memory) inventory falling below three weeks, hesitating whether to accept quotes from manufacturers (Micron, Samsung, SK Hynix) that are close to a 50% increase. A manufacturer employee, Jackey, told reporters, “We are not worried about sales now; if smartphone manufacturers don’t want them, we can allocate our capacity to server customers, who are also in short supply and can pay more.”

Reporters from the Daily Economic News sought confirmation from manufacturers like OPPO and vivo, but had not received a response by the time of publication.

“Top Tier 1 smartphone manufacturers (such as Xiaomi, OPPO, vivo, Honor) have long-term supply agreements (LTA) with manufacturers, so there will not be a shortage. The pressure smartphone manufacturers are currently facing is mainly due to the excessive short-term price increases of memory chips. For example, in the fourth quarter, the contract price for LP4X/5X (two technical standards of low-power double data rate dynamic random access memory LPDDR) increased by 40% compared to the third quarter, and the UFS contract price increased by 25% to 30%,” said Yang Yiting, a flash memory market analyst at CFM, on November 17.

TrendForce believes that brand manufacturers will inevitably reduce the proportion of lower-end products and adjust the terminal prices of the entire product line upwards to maintain normal operations.

Driven by the wave of AI large models, the demand for memory chips in data centers has surged, which is one of the reasons for the recent price increases in memory chips, as server manufacturers are often willing to pay higher prices for procurement. Jiemian News reporters learned that for the same memory products, the prices quoted to server manufacturers are often more than 30% higher than those for smartphone manufacturers.

Fourth Quarter DRAM Contract Prices Increased 75% Year-on-Year

In Yang Yiting's view, recent reports of smartphone manufacturers suspending memory chip procurement actually indicate that the number of LTAs signed by Tier 1 smartphones this year has been basically met, and the short-term shortage of memory chips has not had a practical impact on the mass production and shipment of Tier 1 smartphones. Currently, many smartphone manufacturers are more focused on the supply volume allocated by manufacturers for next year In addition, the industry generally expects price increases to continue at least until the first half of next year. Under the expectation of price increases, smartphone manufacturers need to plan products and stock in advance, further exacerbating the supply-demand tension in the fourth quarter.

The root cause of the price increase in memory chips is that the "insatiable demand" brought about by artificial intelligence (AI) is reshaping the industry. Compared to ordinary servers, each AI server requires 8 times the DRAM and 3 times the NAND compared to ordinary servers.

Faced with the historic opportunities brought by AI, as early as the third quarter of last year, Samsung, SK Hynix, Micron, and other companies began to cut back on some traditional DRAM production capacity with lower profit margins, shifting to the production of higher-margin products such as HBM and DDR5.

Yang Yiting stated that recently, North American CSPs (Cloud Service Providers) have significantly increased their stocking demand for the entire year next year, leading to a significant supply gap in the entire memory chip market from the fourth quarter of this year to the whole of next year.

This structural capacity shift has directly led to a continuous tight supply of LPDDR and other DRAM used in smartphones (mainly used for computer memory, such as DDR, and smartphone memory, such as LPDDR), with price increase expectations being raised repeatedly.

TrendForce pointed out that by the fourth quarter of 2025, DRAM contract prices are expected to rise by more than 75% compared to the same period last year. With memory accounting for about 10% to 15% of the total BOM cost (Bill of Materials), this cost will have increased by 8% to 10% by 2025. More severely, as DRAM and NAND Flash contract prices continue to rise, it is estimated that the total BOM cost will increase by about 5% to 7% next year compared to this year, and it may even be higher.

Xiaomi Corporation partner and president Lu Weibing recently publicly responded on Weibo to the issue of significant price differences between different versions of the Redmi K90 series. “We cannot change the trend of the global supply chain; the cost of memory chips is rising far beyond expectations and will continue to escalate.”

Yang Yiting pointed out that smartphone manufacturers can accept a gradual and moderate increase each quarter, rather than a 40% jump in a single quarter.

How to cope with the sharp rise in memory chip costs in the short term is a challenge faced by all smartphone manufacturers. Directly raising prices significantly is the simplest solution, but consumers are often quite sensitive to price increases in smartphones.

From the market response strategy, smartphone manufacturers generally adopt a strategy of “slight price increase + strategic reduction in memory chip configuration.” For example, a luxurious configuration originally planned to offer “512GB ROM + 16GB RAM” at a certain price point can now only be downgraded to “512GB ROM + 12GB RAM.” In some mid-range models, the configuration of LP4X 8GB ROM has been reduced to LP4X 6GB ROM and below. Yang Yiting analyzed that a 1-2GB reduction in RAM typically does not bring a noticeable difference to users' daily experience However, manufacturers are more cautious about reducing capacity. "Currently, the entire smartphone replacement cycle is getting longer, and the demand for high-capacity NAND from consumers remains relatively strong," said Yang Yiting.

The low-end smartphone market may face a situation of more production leading to more losses

Compared to leading smartphone brands that can still rely on long-term agreements with manufacturers and brand premiums to navigate difficulties, the mid-to-low-end market and some manufacturers that focus on cost-performance as their core competitiveness have been hit more directly and severely by this price increase storm.

"For low-end smartphones, the profit margin on hardware will definitely be under more pressure. Next year, the low-end market may face a shipping bottleneck. Some entry-level models may even experience a situation where the more they produce, the more they lose." Yang Yiting predicts that when formulating next year's product mix, manufacturers may strategically reduce the market share of entry-level models and allocate more resources to mid-to-high-end models that have wider profit margins and can better support brand premiums.

TrendForce indicates that due to the continued tight supply of memory, smaller smartphone brands will find it increasingly difficult to secure resources, and a new round of reshuffling in this market cannot be ruled out, with the trend of "the big getting bigger" becoming more pronounced.

Currently, the impact of rising memory chip prices is clearly reflected in the financial report of Transsion Holdings, known as the "King of African Phones," which is famous for its cost-performance and large shipment volumes.

In the first three quarters of 2025, Transsion Holdings reported revenue of 49.543 billion yuan, a slight year-on-year decrease of 3.3%, but the net profit attributable to the parent company fell by 44.97% year-on-year. In the third quarter alone, the company showed a typical situation of "increased revenue but decreased profit": operating revenue reached 20.466 billion yuan, a year-on-year increase of 22.60%, while the net profit attributable to the parent company was 935 million yuan, a year-on-year decrease of 11.06%. Regarding the reasons for the profit decline, Transsion stated in its financial report that it was due to the combined effects of market competition and supply chain costs, which led to a decrease in operating revenue and gross profit.

In the investor relations activity record released at the end of October, Transsion further discussed the impact of rising memory chip prices and its responses— the company will actively take corresponding measures in response to changes in upstream costs and market competition, such as price adjustments and product structure adjustments.

Huayuan Securities also analyzed in its research report that Transsion's profitability in the third quarter was suppressed by rising memory prices and market competition, but as the company adjusts terminal product prices, it will also promote the recovery of profitability.

Looking ahead, TrendForce's latest report has revised down the global smartphone production and shipment forecast for 2026, from a previous annual increase of 0.1% to an annual decrease of 2%. Additionally, the agency stated that if the imbalance between supply and demand for memory worsens or if the increase in terminal prices exceeds expectations, there is still a risk of further downward revision of production and shipment forecasts.

"The increase in the first half of next year may be somewhat contained and will not be as severe as the explosive growth in the third and fourth quarters of this year," Yang Yiting predicts. This means that the smartphone industry will have to endure a high-pressure environment for at least another one or two quarters Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk