Changxin Rejects Apple's Price Pressure

Today, Yu Chengdong, Huawei's Executive Director, Chairman of the Product Investment Review Committee, and Chairman of the Terminal BG, stated at Huawei's product launch conference that due to the soaring prices of memory, all smartphones may face substantial price increases moving forward; otherwise, selling at previous price points would result in losses. At the same time, the tight storage situation has shown no signs of relief. According to recent media reports, Apple had attempted to negotiate lower DRAM procurement prices with ChangXin Memory Technology but was met with refusal. ChangXin insisted that its pricing should not be lower than that of Samsung Electronics and SK Hynix, and possibly even higher. The reason is quite simple: domestic Chinese companies like Huawei and Xiaomi have locked in ChangXin's production capacity through long-term contracts, so ChangXin does not need to accommodate Apple's stringent conditions. Reports indicate that large tech companies previously often used the strategy of threatening to turn to Chinese manufacturers if their demands were not met, but this path has effectively been cut off now. The significant rise in memory chip prices has become a consensus in the industry, with consumer electronics manufacturers, particularly smartphone makers, unable to bear the burden. This year, several smartphone manufacturers have announced price increases; OPPO, OnePlus, and vivo began raising prices in March, and Xiaomi and Honor have also subsequently raised the prices of multiple models. In addition to smartphones, there are also signs of price increases in the PC and office hardware markets. The trend of price hikes is expected to continue. According to the "Science and Technology Innovation Board Daily," several industry executives, including those from Apple and Xiaomi, have issued clear warnings of impending price increases. On June 18, Apple CEO Tim Cook stated that Apple plans to increase product prices to cope with the soaring costs of memory and storage chips, saying, "Unfortunately, price increases are inevitable. We are doing our utmost to mitigate the huge increases that have been passed on to us, and we have been striving to protect our customers from price hikes, but this situation has become unsustainable." Cook declined to reveal the specific timing, extent, or which products would be affected by the price increases. Long-time Apple analyst Mark Gurman indicated, "Regarding Apple's price increase, I believe it will happen soon, rather than waiting until autumn." On May 21, Xiaomi Group CEO Lei Jun urged consumers to purchase smartphones sooner rather than later, stating, "In the next two years, we predict that memory prices will continue to rise, and smartphone prices will have to follow suit; phones may become increasingly expensive. If you plan to change your phone in the next year, I strongly recommend you do it now." Xiaomi Group President Lu Weibing previously assessed this round of storage price increases as part of a long-term cycle, expected to last until the end of 2027. Starting from the second quarter of 2025, this period is expected to last nearly three years, something that has never happened historically. The impact of this price increase is extensive, affecting not only smartphones but the entire consumer electronics industry, leaving no players unscathed. Xiaomi has already begun implementing price increases; on August 2, Xiaomi Mall updated its prices, raising several key models by between 300 and 500 yuan. Mid-range and low-end smartphone manufacturers face even greater pressure. As early as March, OnePlus's President for China, Li Jie, revealed, "The price increases among different brands are more about discrepancies in inventory rhythm; it's fundamentally just a matter of timing... In a few months, everyone will definitely understand what I mean today." OPPO's Senior Public Relations Manager Cai Zuxuan also candidly pointed out that the fundamental reason for smartphone price increases is simplethe cost of core components like memory continues to rise, regardless of whether it's mid-range or flagship models. The reality is that storage costs are still on the rise, meaning "subsequent products will only become more expensive." Honor CEO Li Jian admitted, "Smartphones are all becoming more expensive," noting that rising memory prices are an industry-wide issue, and the pressure is significant across the entire sector. In June, brands like OnePlus and iQOO launched a second round of price increases. In the future, shipment volume is no longer the main driver; mid-to-high-end models are expected to increase. As storage continues to be in short supply, TrendForces investigations indicate that by the third quarter of 2026, the overall DRAM landscape will remain extremely tight, with contract prices expected to rise by 13-18% quarter-on-quarter, while NAND Flash contract prices are projected to increase by 10-15% quarterly. The three major suppliersSamsung, SK Hynix, and Microncontinue to push for price hikes, with some popular specifications experiencing longer order cycles and tighter supply. Ping An Securities has stated that storage costs continue to rise, making it a significant challenge for mid-range and low-end smartphone manufacturers. Comparing the BOM cost structure between the third quarter of 2025 and the first quarter of 2026 reveals that in smartphones priced below $400, the share of storage costs in BOM nearly doubled in the first quarter of 2026; for models priced above $400, this share has also increased by over 100%. How will this affect downstream manufacturers' product line choices? According to the latest market monitoring report from Counterpoint Research, global smartphone market revenue is expected to grow by 7% year-on-year in the second quarter of 2026, reaching a record $109 billion. Despite a decline in global smartphone shipments during the same period, market revenue has hit a historic second-quarter high. The divergence between revenue and shipment trends can be largely attributed to the rise in average selling price (ASP). Supported by consumers' continued shift toward high-end segments, the ASP increased by 17% year-on-year, reaching a historic second-quarter peak of $400. Additionally, rising storage costs have prompted Android OEMs to raise product prices generally, further contributing to ASP growth. According to Shilpi Jain, a senior analyst at the firm, the global smartphone market has entered a new phase where shipment volume is no longer the primary driver of growth; value growth has become the core of market expansion, and the continually rising cost of components has accelerated this trend. Looking ahead, with tight storage supplies and rising costs showing no signs of relief in the short term, OEMs are expected to continue to raise prices, with supply increasingly becoming a constraint on industry development. The smartphone industry may face even more severe declines in shipment volumes in the second half of 2026. Therefore, it is also anticipated that ASP will continue to increase in the coming quarters. Moreover, as storage costs continue to rise, the polarization of smartphone storage configurations is expected to intensify. According to Omdia, as the financial pressure from rising storage costs continues to mount, smartphone manufacturers are further reducing their presence in entry-level products and shifting their product mix toward higher-margin mid-to-high-end models. To meet the growing performance expectations for high-end products while supporting rising retail prices, high-end and flagship smartphones will continue to enhance their storage configurations. Omdia's Senior Research Manager Jusy Hong stated that this differentiated product strategy will further exacerbate the polarization of storage configurations in this years smartphone market: high-end models will continue to increase storage capacity, while entry-level models face trends of reduced storage configurations. This article is reproduced from "Caijing Lianhe," author: Song Ziqiao; GMTEight editor: Xu Wenqiang.