Source | Benyuan Finance

Author | Yu Shuya

A memory dealer candidly remarked, "The prices of memory modules are now in constant flux, and having money doesn't necessarily mean you can secure the product."

If you're in the market for a new phone, brace yourself—the latest models are priced higher than anticipated. Furthermore, Xiaomi has directly cautioned that smartphone prices will generally be steeper in 2026 compared to 2025, with memory cost surges reaching a juncture where "price hikes cannot fully compensate for the rising expenses."

However, phone price increases are not a novelty; they've been on the rise since last year. Is this statement a genuine logical breakdown, or is it leveraging memory price hikes as a pretext to rationalize phone price increases?

In reality, major clients such as ByteDance, Alibaba, Tencent, Xiaomi, and Huawei have established long-term strategic cooperation agreements with hardware manufacturers. Even in the face of price hikes, the increases are relatively modest when viewed on a quarterly basis and won't suddenly double.

Nonetheless, the "spot market" is in disarray. Mid-to-downstream small and medium-sized brands and channel distributors lack direct rights to production capacity allocation and must compete fiercely for resources "left over" by upstream manufacturers or even settle for second-hand supplies. Due to severe market shortages and unstable supply sources, memory prices have witnessed extreme daily fluctuations.

Over the past two years, I've procured hundreds of enterprise-grade memory modules, and prices have now tripled. The current mainstream prices for 32GB DDR5 memory are soaring.

According to data from multiple market research firms:

DRAM prices surged by 171.8% year-on-year in the third quarter;

Since September, some DDR5 chip prices have increased by over 300% month-on-month;

Server DRAM quotes rose by 70%, with spot prices surging by 336%;

Retail prices for 32GB DDR5 memory modules skyrocketed from $130 to $440 in just three months.

The driving force behind this price surge isn't traditional consumer electronics like phones or computers but the explosive growth of the North American AI server market.

Hyperscale cloud service providers such as Google, Meta, Microsoft, and Amazon are aggressively constructing AI data centers. However, they don't rely on the consumer-grade memory modules we use daily, as those are too sluggish for their needs. Instead, they require high-bandwidth memory (HBM)—a critical, irreplaceable component for training large AI models.

Currently, HBM demand growth is far outpacing industry expectations:

In 2023, supply initially fell short of demand;

In 2024, AI inference cluster expansions accelerated;

By 2025, HBM demand is projected to grow 2-3 times.

Samsung publicly stated that demand will surpass its supply capacity by 2026.

Under these circumstances, memory manufacturers like Samsung, SK Hynix, and Micron are almost inevitably shifting their production capacity: on one side are low-power memory modules sold to mobile phone manufacturers, with transparent pricing and low profit margins; on the other side is HBM sold to AI server giants, which not only enhances the computing power profile of your company but also commands extremely high unit prices, with customers willing to pay premium prices without negotiation.

As memory manufacturers allocate more capacity to HBM, traditional memory module output is inevitably squeezed. With supply-side contractions, consumer-grade memory module prices are escalating rapidly.

This puts mid-to-low-end mobile phone manufacturers in a precarious position. Models that rely on high cost-performance ratios are facing sustained memory cost increases, forcing mid-range manufacturers to choose between raising prices or downgrading specifications.

Opting for price hikes carries risks, as consumer replacement cycles have lengthened from 25.3 months in 2020 to 40 months in 2024.

Raising prices amidst weak demand could lead to sales declines and reputational risks. Thus, "reducing capacity and specifications" may become the industry's default strategy in the mid-to-low-end market.

Android manufacturers who originally planned to upgrade standard memory to 12GB by 2024-2025 are now compelled to maintain 8GB. Some flagship models have even experienced rollbacks in areas like imaging.

In contrast, high-end manufacturers fare differently. With Apple and Huawei focusing on premium models, they enjoy high profit margins and strong pricing power, even using strategic price cuts to squeeze the mid-range market. Thus, memory price hikes have inadvertently aided high-end manufacturers in solidifying their mid-to-high-end market shares.

The question on everyone's mind is: can consumers who adopt a wait-and-see approach still come out ahead?

Unfortunately, this storage storm shows no signs of abating in the short term. As long as AI remains a hot topic, storage chip prices are unlikely to revert to the "bargain" era of the past. Consumers, who once received free SSDs and memory with computer purchases, are now reluctant to pay inflated prices. Those with genuine needs may resort to the second-hand market for temporary solutions, as phones and computers remain more entertainment-oriented than productivity tools for most people.

With consumers delaying upgrades, mobile phone manufacturers face challenges, while PC manufacturers struggle even more. The era of cost-performance-driven mobile phones may be a thing of the past.

End

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