(Yicai) Nov. 6 -- The steady climb in memory prices is forcing Chinese mobile phone manufacturers to raise sales prices or adjust their product mix by rolling out more high-end models that can better absorb higher component costs, industry insiders told Yicai.

Memory accounts for between 10 percent and 20 percent of a phone’s hardware cost, said Wang Xudong, a semiconductor analyst at Chinese market research firm Sigmaintell. The recent price surge has led to the price of mid- to high-end smartphones going up by between CNY100 (USD14) and CNY500, and the price gap between the same cell phone model with different memory specs has widened to as much as CNY4,000 (USD561).

“Take the 4 Gigabyte LPDDR4X as an example. The average price of this memory solution was 30.4 percent higher in the third quarter than in the second quarter, while that of other Dynamic Random Access Memory products also jumped more than 20 percent,” Wang said. If phone makers do not raise the price of mobile phones with big memory storage, they could end up losing money, he added.

“The 2-Terabyte iPhone 17 Pro Max costs CNY4,000 (USD561) more than the 1TB version, and the price difference between the 256GB and 512GB versions of Android phones has also soared to between CNY500 (USD70) and CNY600,” consumers complained on social media.

Price Hikes

And the price hikes are not over yet. Beijing-based Sigmaintell expects LPDDR4X prices to rise another 10 percent to 15 percent in the fourth quarter. Prices for low-capacity memory are expected to stay strong through to next year, while that of large-capacity memory may only begin to drop in the second half.

“We expect memory prices to keep climbing through to the first half of next year. But this upward trend is likely to slow or even level off by the second half of 2026 as production capacity and inventories rise,” Wang said.

This means that the prices of consumer electronics, including mobile phones and computers, are likely to remain under considerable pressure, which may last over a year. However, big jumps in prices are unlikely because consumers are highly price sensitive.

Flagship Push

Amid rising memory costs, mobile phone makers are expected to promote higher priced pro/max versions of their flagship products more aggressively to protect margins, said Guo Tianxiang, research manager at market research firm International Data Corporation China.

However, discounts on regular popular products will continue to squeeze the market share of phones sold between CNY3,000 (USD421) and CNY4,000, a segment which is already struggling with low profit margins. Faced with rising cost pressure, smartphone companies may also become more conservative about technological innovation, he added.

Handset manufacturers will have to find a careful balance between ‘raising prices to maintain profits’ and ‘cutting costs to stay competitive’ for a long time to come, Wang said. For instance, if they cut the specs on low-end devices to control costs, this could make consumers less willing to upgrade, he added.

Editors: Tang Shihua, Kim Taylor