(Yicai) Jan. 30 -- Shares in Transsion Holdings slumped today after the Chinese phone maker known as the ‘King of Mobile Phones in Africa’ said it expects net profit for 2025 to be half what it was a year earlier due to the surging price of memory chips.

Transsion’s share price [SHA:688036] closed down 3.9 percent at CNY58.13 (USD8). The stock has lost around 44 percent in value since last year’s high which was reached on Feb. 6.

Transsion’s net profit plunged 54 percent last year from the year before to CNY2.5 billion (USD359.7 million), while revenue tumbled 5 percent to CNY65.6 billion (USD9.4 billion), the Shenzhen-based phone maker said in its earnings forecast released yesterday, which was based on preliminary calculations by its finance department.

This marks the steepest annual drop in net profit since Transsion went public on Shanghai’s Nasdaq-style Star Market in 2019.

The sharp increase in the prices of components, including memory chips, pushed up product costs and squeezed the overall gross margin during the reporting period, Transsion said. At the same time, the company ramped up spending on sales as well as research and development to remain competitive in the long-term, it added.

Driven by a surge in demand for AI infrastructure, the global memory chip market has been grappling with persistent supply shortages since the second half of last year, causing prices to rise significantly.

The memory cost per smartphone is likely to surge 37 percent in the fourth quarter of 2026 from a year earlier, equivalent to a rise of USD16, according to a report released by Swiss banking giant UBS late last year. This increase would amount to 6 percent of the average selling price of low- to mid-end mobile phones and 2 percent for high-end models.

Zurich-based UBS noted that rising memory prices will hit low- to mid-range smartphone makers much harder than premium brands. As a result, these manufacturers will likely be forced to adopt more aggressive measures, such as raising prices, cutting memory configurations or lowering profit expectations.

Founded in 2013, Transsion focuses on selling smartphones in emerging markets outside China. Its global sales network spans more than 70 countries and regions, including most African nations as well as India, Pakistan, Bangladesh, Indonesia, the Philippines, Saudi Arabia, Colombia and Brazil.

In the third quarter of last year, Transsion’s smartphone shipments in Africa jumped 25 percent year on year to 11.6 million units, dominating the market with a 51 percent share,while Samsung trailed behind in second place with just 15 percent market share, according to data from UK market research firm Omdia.

Editor: Kim Taylor