Due to artificial intelligence, rising DRAM and NAND memory prices are putting pressure on smartphone manufacturers. These increasing costs are driving up smartphone prices and impacting manufacturers' profitability. Xiaomi President Lu Weibing highlighted the rising costs due to memory prices in a statement on Weibo.
4-Fold Increase in One Year
According to Weibing, the price of components with the same RAM and storage capacity has increased by almost 4 times in the last year. For example, the cost of the 12 GB RAM and 512 GB storage combination, commonly used in flagship phones, increased by approximately 1,500 yuan (218 dollars). For higher-end options like 16 GB RAM and 1 TB storage, the increase is said to be much higher.
This statement was made to explain the price increases that Xiaomi's sub-brand Redmi had to implement in China. However, this situation is not unique to Xiaomi; it represents a global economic trend affecting all manufacturers. Therefore, prices for Android flagship phones with similar hardware are expected to increase by 100–200 dollars, with the possibility of an even higher increase.
Price Increase Currently Limited Due to Manufacturers' Existing Stock
So, why haven't all Android brands raised their prices yet? The main reason is the existing stock held by manufacturers. Production and supply agreements for phone components are made months, or even years, in advance. This creates a delay in reflecting price increases to consumers. Companies first deplete their older, cheaper stock, and then pass on the new, more expensive production costs to prices.
We are already seeing some brands starting to increase prices. As old stock runs out, new models entering the market will inevitably become more expensive.
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