The iron rule in the mobile phone industry, "buying later means enjoying discounts," is completely breaking down under the impact of upstream cost pressures.
On August 2nd, Xiaomi Mall completed a unified price update, with a total of 9 models across the Xiaomi 17 series, REDMI K90 series, and Turbo 5 series simultaneously raising their prices. Among them, the flagship Xiaomi 17 series saw an increase of 400-500 yuan, with the top-tier Xiaomi 17 Pro Max starting price rising from 5,999 yuan to 6,499 yuan; all models in REDMI's two product lines saw a unified increase of 300 yuan, with starting prices breaking through the 2,500 yuan threshold.
This is Xiaomi's third price adjustment this year, highlighting how the pressure from rising storage costs is climbing up the product line step by step. The first round in March targeted entry-level models, the second round in June covered mid-range models, and the third round in August reached the flagship product line, clearly demonstrating the path of "cost pressure being transmitted from the bottom up."
Beyond the price hikes, Xiaomi's smartphone business is at a critical juncture of declining sales.
IDC data shows that global smartphone shipments in Q2 2026 were 277.5 million units, a year-on-year decline of 6.7%. Xiaomi ranked third globally with 31.2 million units shipped and an 11.2% market share, still the top domestic manufacturer. However, its shipments fell by 26.3% year-on-year, representing the largest decline among the top five vendors.
The pressure is even greater in the domestic market. An Omdia report indicates that in Q2, Xiaomi shipped 8.2 million units in mainland China, capturing a 12% market share and ranking fifth. This represents a 21% year-on-year decline, placing Xiaomi behind Huawei, Apple, OPPO, and vivo. This decline is attributed both to the demand-suppressing effect of terminal price increases and to Xiaomi's strategic adjustment of actively reducing the proportion of entry-level models and upgrading its product mix. In contrast, the top two vendors, Huawei and Apple, saw their shipments grow by over 24% year-on-year.
The direct driver of this round of price increases is the persistently rising cost of memory chips.
The explosion in AI computing demand has led major memory manufacturers like Samsung, SK Hynix, and Micron to shift their advanced production capacity towards higher-margin HBM (High Bandwidth Memory), continuously squeezing the supply of consumer-grade DRAM and NAND.
Lu Weibing, President of Xiaomi Group, revealed in a previous public communication that prices for memory of the same specification have surged nearly 4-fold compared to Q1 2025; for a mainstream 12GB+512GB configuration, the storage cost per phone has risen by approximately 1,500 yuan. According to IDC estimates, consumer-grade memory costs have increased nearly 300% year-on-year, accounting for over 65% of the bill of materials for low-end models priced below $200. He admitted that the mobile phone industry is experiencing its most severe moment in nearly a decade, with the memory price hike trend likely to continue at least until the end of 2027, possibly even into 2028. In the second half of this year, the price of some domestic flagship smartphones could very likely break the 10,000 yuan barrier.
Facing the dual challenges of rising costs and sales pressure, Xiaomi is also taking proactive measures to hedge risks, such as increasing investment in self-developed chip layout and optimizing product storage configuration planning. The company is pushing for the mass production of its Surge series of self-developed chips to reduce dependence on external procurement of core components. Simultaneously, it is adjusting the SKU structure and distribution ratios of storage capacities across different tiers of models to smooth out the impact of upstream cost fluctuations on terminal pricing and product competitiveness as much as possible.
Xiaomi's price increase is not an isolated case.
Since March this year, mainstream brands including OPPO, OnePlus, vivo, and Honor have already raised prices for some models in batches. Apple also raised prices for iPads and MacBooks in June, with Tim Cook stating that price hikes were "inevitable." According to industry insiders, domestic mainstream brands may face a second round of price adjustments in the second half of the year, with expected increases ranging from 200 to 800 yuan.
A price increase cycle covering the entire industry has begun. Whether it's manufacturers adjusting their product strategies or consumers making decisions about phone upgrades, both will need to recalibrate in the face of this wave of cost pressures.
Source: Galaxy Business Review
This article is from "ZAKER Finance"
