Xiaomi's Memory Crunch: Price Hikes in 2026 and Phone Plans

Xiaomi's Price Hike Gamble: Can Premium Phones Offset Memory Costs?

The smartphone market is bracing for a shakeup, and memory prices are the likely catalyst. Xiaomi President Lu Weibing has publicly stated that memory shortages could push smartphone prices higher in 2026. Samsung is feeling the pressure too, particularly with the upcoming Galaxy S26 launch. The core issue? Memory and application processor (AP) costs are rising, squeezing margins and forcing a potential price increase.

The Memory Squeeze: A Perfect Storm

Lu Weibing pinpointed 2023 as the low point for memory chip prices. Now, we're seeing a surge, driven largely by the demand for High Bandwidth Memory (HBM) used in AI applications. The problem isn't just demand; supply is constrained. New memory output isn't expected until 2027. This creates a classic supply and demand imbalance, pushing prices upward.

Xiaomi's strategy seems to be a move toward premium models, like the Mi 17 series, to maintain profitability. They're aiming to compete directly with Apple's iPhone 17. We saw a price increase on the Redmi K90 flagship recently, partly attributed to rising memory costs. It's a calculated risk: can they convince consumers to pay more for a Xiaomi phone? South China Morning Post quoted Lu as saying some companies might "fall behind—or even exit the market." It’s a stark warning. What percentage of consumers will accept the price increase, and how will this affect Xiaomi's market share in the long run?

Despite these cost pressures, Xiaomi's Q3 results were surprisingly strong, with revenue up 22.3% to RMB 113.1 billion. Even their electric vehicle (EV) unit posted its first profitable quarter. This is the part of the report that I find genuinely puzzling. Are the profits from the EV division masking some of the margin pressures in the smartphone business?

Samsung's Dilemma: Balancing Margins and Market Share

Samsung's Device Solutions Division stands to benefit from higher memory prices, but their Mobile eXperience (MX) business faces a different reality. If they raise handset prices to compensate for increased component costs, it could negatively impact sales. They're currently evaluating Galaxy S26 pricing (launching in February).

The situation is compounded by a 25.5% year-on-year increase in Qualcomm application processor (AP) expenses. Samsung spent around 11 trillion won on APs in Q3. Reuters also reported that Samsung raised prices on certain memory chips by 30–60% this month.

Trendforce has lowered its 2026 global production forecasts for smartphones and notebooks. [News] Memory Crunch Hits Smartphones: Xiaomi Flags 2026 Price Hikes, Samsung Under Memory, AP Pressure Smartphone output is now projected to decrease by 2% year-over-year, compared to an earlier estimate of a +0.1% increase. Notebook production is expected to shrink by 2.4%, down from a previous forecast of +1.7%. These revised forecasts paint a concerning picture for overall market growth. What alternative cost-saving measures, such as optimizing supply chain or sourcing cheaper components, are Samsung exploring to avoid passing the full cost increase onto consumers?

A Costly Game of Chicken

Xiaomi and Samsung are essentially playing a game of chicken with consumers. Who will blink first? Will consumers accept higher prices, or will they switch to cheaper brands (or hold onto their existing phones for longer)? The data suggests a slowdown in overall smartphone production, implying at least some consumer resistance to price hikes. This is a crucial point. The entire industry is banking on consumers accepting the new normal, but what if they don't?

The Price of Progress?