(Yicai) March 2 -- This year’s first price increases for Chinese smartphones could land within days, according to industry sources, as record high memory costs ripple through the supply chain and squeeze manufacturers’ margins.

Starting prices for many upcoming models have been raised by CNY600 to CNY1,000 (USD87 to USD146), while mid- to high-end flagship devices may see increases of CNY2,000 to CNY3,000, distributors told Yicai, adding that higher prices will not be limited to new releases, with some older models also set to become costlier.

With demand far outstripping supply, prices of dynamic random-access memory, NAND flash memory, and high bandwidth memory have reached record highs. If memory prices remain elevated, the market could see multiple rounds of price increases in 2026, the distributors noted.

Memory prices have surged 80 percent to 90 percent so far this quarter compared with the final three months of last year, with DRAM, NAND, and HBM all hitting historic highs, according to the February Memory Price Tracker report released by Counterpoint.

The main driver has been a sharp increase in general server DRAM prices. NAND flash memory prices, which were relatively stable in the fourth quarter, have also climbed 80 percent to 90 percent this quarter, while some HBM3e, an enhanced version of HBM3 products, posted further gains, indicating broad-based price acceleration across categories.

The price spike is pressuring smartphone makers’ margins, especially at the budget end of the market. Over the past decade, producers of entry-level models priced around CNY1,000 traded low margins for high volumes. But with memory costs high, margins on low-end handsets have been squeezed, and some budget models may exit the market as manufacturers pivot toward mid- to high-end models, potentially increasing industry concentration, according to industry players.

The supply of popular smartphone models, particularly high-memory versions, has already tightened, and manufacturers will prioritize configurations with higher profit margins, one distributor said. 

When the focus on high-margin products will end “depends on when investment in computing power cools down,” an executive at one handset maker pointed out. If the pace of artificial intelligence-related capital expenditure slows, the supply-demand balance for general-purpose memory may ease, the person added.

Meizu recently said the handset maker has halted development of new in-house hardware projects for the domestic market, citing fierce competition and surging memory prices. It said that despite continued efforts to maintain normal product iterations despite intensifying market pressures, the spike in memory costs has made the commercialization of upcoming models “impossible.”

Editor: Emmi Laine