"Memory skyrocketed" for 100 days, low-end mobile phones were forced to die

# Tencent Tech

Memory prices have surged sharply within 100 days. In Q1 2026, DRAM prices rose more than 50% quarter-on-quarter, and NAND over 90%. Brands including Xiaomi, Transsion, Lenovo, OPPO, and vivo have announced price increases one after another. Low-end smartphones have borne the brunt: storage now accounts for 43% of the BOM cost, and some makers have halted production of entry-level product lines. Analysts expect prices will be hard to reverse, as AI computing demand continues to crowd out consumer-grade storage capacity. The earliest relief window may be 2027.

As you can see, Xiaomi said price hikes are “painful to bear,” and Transsion, Lenovo, OPPO, and vivo have raised prices in succession.

The entire consumer electronics industry is trying to offset margin erosion from rising memory costs by increasing prices. Soon, the impact of price hikes has reached consumers.

“I bought a lifetime-warranty RAM module that malfunctioned, and after nearly a month, there has been no real progress in after-sales service,” one consumer wrote in an email. They were told the unit could not be repaired or replaced, only refunded.

The conflict between consumers demanding lifetime warranty and platforms only offering refunds is a direct result of the memory price spike—all because of the word “surge.”

On social media and in e-commerce platform comment sections, discussions about doubled memory prices are widespread. Storage has suddenly become a “top annual financial product,” jokingly called “digital gold” by the industry. The relentless price increases have hurt both “cyber gamers” and consumer electronics manufacturers.

According to Lu Weibing, President of Xiaomi, memory prices jumped roughly 400% year-on-year in Q1 2026 alone, soaring from $30 to over $120.

A founder of a mini-PC brand said costs were already high, and with storage prices rising, end prices have “gone through the roof.”

“Before, users thought ‘it’s expensive’; now they just ignore it. They don’t care how much RAM or storage you have.”

## 01 Even Apple Can’t Bear the Memory Surge

Among Chinese smartphone makers, Transsion—known as the “King of African Phones”—was the first to feel the chill of rising storage costs.

“Everyone is struggling. Costs, selling prices, budgets—all are directly affected,” a Transsion insider said when asked about the impact of rising storage prices.

Earlier, Transsion stated in its 2025 earnings flash that component prices including storage had risen significantly due to supply chain pressures, impacting product costs and gross margins, leading to a decline in overall gross profit during the reporting period.

“Their stock fell so much last year because the market said Transsion was out of stock—not about price, but no inventory,” a researcher who has long tracked the storage industry emphasized. However, the stock-out claim was not independently verified by Tencent Tech.

At MWC, Lu Weibing quantified the frenzy of memory price increases.

He revealed that memory quotes in Q1 2026 were nearly four times those in Q1 2025.

“A 12GB+256GB storage combination cost around $30 at the low point; four times higher means it has reached $120–130.”

The storage crunch affects not only Chinese phone makers but also giant Apple.

At Apple’s recent Q1 earnings call, when asked about supply chains, Tim Cook named two major uncertainties. Ming-Chi Kuo of TF International Securities summarized them as supply constraints and cost pressures: supply constraints relate to advanced processes for SoCs, while cost pressure mainly comes from memory procurement.

“The constraints we face are around the availability of advanced nodes that are the foundation for our system-on-chips. From a memory perspective, it had very little impact in Q1, but we expect it to have a greater impact on gross margins in Q2,” Cook said.

In short: Apple’s main concern is TSMC’s advanced capacity affecting chip delivery. Memory hikes only eat into gross margins—meaning Apple is not worried about memory supply.

A notable detail: iPhones account for 20%–25% of mobile DRAM and NAND demand, yet Apple is not facing supply restrictions. Ming-Chi Kuo sees this as positive for non-AI storage products, implying some supply relief.

However, Chen Qi, an investor focused on semiconductors, believes Apple’s ability to “secure supply” comes down to its massive cash position.

“Apple has extraordinary cash flow and thick profit margins. Even facing a 100% price hike from Samsung, it can agree without hesitation. Money buys market share.”

But even Apple must compromise in a seller’s market for storage. The storage researcher noted that in early 2025—a buyer’s market—brands signed annual supply contracts with memory makers. Now, contracts are quarterly.

Overall, whether supply eases or not, rising memory costs directly squeeze gross margins for consumer electronics makers like smartphones and PCs.

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## 02 Smartphones and PCs Follow with Price Hikes

Memory price increases are hitting consumer electronics makers quarter by quarter.

Ming-Chi Kuo predicted iPhone storage contracts are now negotiated quarterly, so prices will rise again in Q2 2026.

“At this point, the Q2 quarter-on-quarter increase will likely be similar to Q1.”

Lenovo faces a similar situation.

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

“We have signed the best possible contracts with core component suppliers to ensure sufficient supply for next year,” Yuanqing Yang said at the Q2 earnings briefing.

One quarter later, LanJing News reported that amid the memory price surge, Lenovo had issued price adjustment notices to channel partners, deciding to raise prices on some PC products.

“I don’t think Lenovo can escape this major storage cycle. Huawei raised prices in Q4 last year; Lenovo delayed by one quarter, probably because they stocked one extra quarter,” an investor who recently attended Lenovo’s TechWorld in Hong Kong said.

With inventory falling and memory quotes staying high, the most direct response for brands is to raise prices and pass costs to consumers—hence the wave of official price hikes from phone makers.

For some brands, price increases also reflect regional and geopolitical factors. A Transsion insider noted that base pricing is set annually at headquarters, with regions adjusting locally.

“The Middle East is also struggling; logistics can be a problem. Many Middle Eastern clients couldn’t travel for MWC.”

For consumer electronics brands, memory is a factor, not the final decider—they still must launch products. A storage supply chain source said:

“At this stage, customers are less sensitive to price and more focused on stable supply.”

However, follow-up price hikes also bring passive harm to brands.

At SMIC’s February earnings call, Co-CEO Zhao Haijun said strong AI demand for storage has squeezed other applications, especially low- and mid-end segments, leaving terminal makers facing shortages and price pressure.

“Even if vendors pass costs through price adjustments, demand for end products will drop.”

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## 03 Low-End Phones Face Extinction

Price hikes erode margins and threaten the survival of low-end devices.

Counterpoint’s newly released **Storage Price Tracker** shows that in Q1 2026:

- DRAM prices rose **over 50% QoQ**

- NAND prices rose **over 90% QoQ**

For low-end phones priced below $200 wholesale, with other costs unchanged, a 6GB LPDDR4X + 128GB eMMC configuration pushes total BOM costs up 25% quarter-on-quarter, with storage accounting for **43% of the total BOM**.

“Rising storage prices are structurally impacting smartphone BOM costs,” emphasized Shenghao Bai, senior analyst at Counterpoint.

This structural shift hits low-end phones hardest: in the short term, selling one means losing money.

So, unless makers accept losses for market share, the most direct response is to cut low-end shipments or even discontinue lines.

The storage industry researcher revealed that some domestic makers have already stopped entry-level production.

“Once inventory sells out, they will pause production for the time being.”

Besides cutting lines, supply chain sources mentioned adjusting hardware configurations.

“Major brands can pressure R&D to balance costs,” the source said, optimizing specs without hurting performance—a point also noted in Counterpoint’s report as “spec optimization.”

But Counterpoint warned that with prices soaring, conventional cost cuts will have limited effect. Retail prices for low-end devices are expected to rise by roughly $30.

“Companies are stuck. If you don’t raise prices, you have no stock. If you do, costs jump and consumers stop buying. Either way, it’s painful,” the mini-PC founder said.

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## 04 Storage Will Never Return to Old Levels

In Lu Weibing’s forecast, storage price increases will last through the end of 2027.

Shenghao Bai of Counterpoint also gave a pessimistic outlook:

“Relief is unlikely in the short term. 2027 may be the earliest window.”

Investor Chen Qi said a return to previous prices may indeed have to wait until 2027. He stressed prices will be hard to correct quickly. The turning point depends on external pressures and uncertainty around capital confidence in AI.

“The key is whether Middle Eastern capital will keep funding data center construction and pouring money into AI companies.”

This returns to the core driver of the storage surge: **AI demand crowding out consumer-grade supply**.

Starting in H2 2025, to meet exploding AI inference storage needs, some makers aggressively shifted capacity toward AI storage, further squeezing consumer-grade output. Top players like Micron directly cut support for consumer businesses and shifted almost entirely to AI.

“Overseas giants will definitely ignore consumer markets—they chase profits. Capacity is moving to HBM. They are purely commercially driven in the Chinese market,” the storage industry source said.

He added that domestic storage makers must also follow market trends while fulfilling supply guarantee tasks for local clients.

In market terms, even “aggressive” Micron could act as a supply regulator.

“Micron is not in Nvidia’s HBM4 supply chain, and profit from DDR5 is not lower than HBM,” the researcher noted.

However, it is unlikely that GPU makers will scale back demand to free up storage capacity. To secure HBM supply, Lisa Su personally negotiated with Samsung, and Jensen Huang openly stated Nvidia would take **all the capacity** storage makers can add.

Nvidia, AMD, and others are absorbing every bit of storage available—not only HBM based on DRAM, but also NAND driven by inference tasks like programming frameworks and OpenClaw.

“KVCache, user history, RAG—all familiar topics—but after Agents took off, storage demand grew exponentially,” said a domestic computing power practitioner.

“After Anthropic’s Sonnet 4.5, coding, Agent, and tool-use capabilities improved sharply. And the ‘shrimp-raising’ [inference] trend is still growing.”

So even if the industry expects price corrections in 2027 and 2028, as AI demand keeps expanding and storage makers lack incentive to support consumer markets, the storage industry will **not return to previous conditions**. As investor Chen Qi put it: only if capital stops betting on AI.

Of course, there is another scenario: the day the AI bubble bursts.

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Source: Tencent Tech

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