Smartphone Price Surge: Mid-to-Low-End Brands Face Pressure, Premiumization May Accelerate

China News Service reported that major domestic smartphone brands—including OPPO, vivo, Xiaomi, and Honor—will raise prices in March. Zhang Yi, chief analyst at iiMedia Research, called March a “price watershed”: older models will see moderate increases, while new models will jump sharply. Overall, the market is expected to rise around 18%, with flagship models increasing by over 30%.

Rising Costs Drive Price Hikes

Analysts identify surging memory chip prices as the main factor. According to Counterpoint, Q1 2026 saw memory and NAND flash prices rise 80%-90% quarter-on-quarter. Gao Zhengyang noted that global tech giants’ investment in AI infrastructure has crowded out mobile memory supply, causing structural shortages. Rising costs of upstream materials, like copper, also contribute to higher component prices.

Amid tight supply, manufacturers compete aggressively to secure chips. Zhang Yi observes that leading brands benefit from supply chain leverage and economies of scale, whereas smaller brands face greater pressure. IDC data show that memory accounts for nearly 30% of mid-to-low-end device costs. Although absolute costs are higher for flagships, profit margins provide more cushion.

Budget Phones Under Pressure

Budget smartphones will not disappear but their market share is expected to shrink. Zhang Yi explains that these phones remain necessary for the elderly, as secondary devices, and for lower-tier markets. However, negative margins may force cost reductions or lower production. Consumers may extend replacement cycles or opt for higher-end models to achieve longer usage, further consolidating market share among top brands.

Premiumization Emerging

In the short term, rising prices may extend replacement cycles and reduce sales. Guo Tianxiang predicts the market may shrink by 10.5%, though average prices will increase over 10%. In the medium to long term, product restructuring and innovation will increase the share of premium models, keeping profits stable. High-value products such as AI smartphones, foldable phones, and multimodal interaction devices will be R&D priorities.

Zhang Yi emphasizes that the price surge imposes an “innovation compulsion”: brands must innovate or risk being eliminated. This shift may ease low-cost competition and drive the industry toward higher quality, technology, value, and profitability.