The core reason for this price surge isn't that manufacturers are seizing an opportunity to maximize profits. Rather, they have transitioned from being "price setters" to "price takers." Their bargaining power with memory chip suppliers has diminished, while their dominance over consumers has waned. While customers feel the pinch of rising prices, manufacturers are suffering even more acutely.

After the National Day holiday, Xiao Zeng opened the Xiaomi Mall app.

Unlike the previous five years, he didn't rush to check out the newly released Xiaomi 18 Pro. As a seasoned "wait-and-see" consumer, he had his own strategy: when a new flagship model is launched, the price of the previous generation typically drops significantly. The Xiaomi 17, released last September with a starting price of 4,499 yuan for the 12GB+256GB version, was no exception. He waited a year, anticipating a discount.

But this time, he was taken aback by what he saw on the screen. The starting price of the Xiaomi 17 had now risen to 5,099 yuan.

Thinking he might have misremembered, he checked his records and discovered that the phone had undergone two price hikes within a year—from 4,499 yuan to 4,799 yuan on August 2, and then to 5,099 yuan on September 1. The trend was unmistakably upward.

He recalled the government subsidies: up to 500 yuan off for devices priced under 6,000 yuan. After applying the subsidy, the price dropped to 4,599 yuan—still 100 yuan higher than the launch price.

His curiosity led him to check the Xiaomi 17 Ultra. Released at 6,999 yuan late last year, he had skipped it, assuming prices would drop. Just days before he opened the app, the entire lineup of the Ultra had been repriced: the standard 12GB+512GB version jumped from 6,999 yuan to 7,999 yuan, while the Leica-edition 16GB+1TB model soared from 8,999 yuan to 9,999 yuan—a 1,000-yuan increase. The 7,999-yuan price even exceeded the 6,000-yuan subsidy threshold, making it ineligible for discounts.

He checked other brands as well. The iQOO 15 (12+256GB), launched at 4,199 yuan in October, now cost 4,999 yuan after two hikes. The Huawei Mate 80 (12+256GB) rose from 4,699 yuan to 5,499 yuan.

After calculating all possible discounts, Xiao Zeng faced an uncomfortable truth: in previous years, new models were launched while old ones saw price drops. This year, however, new models hiked prices, and old ones followed suit. Even subsidies couldn't keep pace with the increases.

He closed the Xiaomi Mall app, undecided on whether to make a purchase. He realized one thing: if he bought a phone this year, he wouldn't be celebrating a "wait-and-see victory" but merely minimizing his losses in a wave of price hikes.

Smartphone manufacturers, however, are even more anxious than Xiao Zeng.

The Most Expensive September in History

Let's take a closer look at the flagship phone prices this September.

On September 21, the vivo X500 debuted with a starting price of 5,499 yuan, up 1,100 yuan from the X300's 4,399 yuan. The next day, the OPPO Find X10 followed suit, with its standard version also rising 1,100 yuan to 5,499 yuan, while the Pro Max version hit 6,799 yuan. OPPO introduced a new 4,999-yuan E variant to maintain a sub-5,000-yuan option. On September 23, the Xiaomi 18 Pro launched at 5,999 yuan, a 1,000-yuan increase over its predecessor.

All three brands released their flagships within three days, and none of them lowered their prices.

The steepest price hikes weren't for foldable phones but for high-storage variants. Multiple Android flagships with 16GB+1TB configurations saw price jumps of roughly 3,000 yuan compared to their predecessors. Some foldable models rose by 1,000 to 3,000 yuan. Industry media reported that by late September, the 12GB+256GB versions cost over 1,000 yuan more than last year, while the 16GB+1TB variants exceeded 2,500 yuan.

Apple's price hikes were even more dramatic. The iPhone 18 Pro started at 9,999 yuan, while the 2TB iPhone 18 Pro Max reached a staggering 21,499 yuan.

A closer look at the price list reveals a critical detail: the larger the storage capacity, the steeper the price increase. This suggests a direct pass-through of rising costs rather than brands testing premium pricing or employing marketing tactics. Memory and flash storage prices are skyrocketing.

Supply chain data illustrates the issue: in the second quarter of 2026, DRAM contract prices surged nearly 60% quarter-over-quarter, while NAND prices jumped over 70%. According to Weibo blogger *Digital Chat Station*, a 12GB+256GB storage combination rose from about 500 yuan a year ago to 2,200 yuan—surpassing flagship SoCs as the most expensive single component in smartphones.

More alarming than the price hikes is the shrinking market. Counterpoint's August 24 report projected a 14.3% year-over-year decline in global smartphone shipments to around 1.08 billion units in 2026, the largest annual drop since 2013. Two days later, IDC revised the forecast downward to 16.7%. Manufacturers now prefer selling fewer units than overproducing.

What's Driving This?

Anatomy of a Price Hike: AI Consumes Smartphone Silicon

To understand the smartphone price hikes in 2026, we need to look at another industry: AI.

Over the past two years, demand for NVIDIA GPUs has exploded. These GPUs require a specialized memory chip: HBM. With profit margins several times higher than those for smartphone memory, Samsung, SK Hynix, and Micron have allocated over 70% of their advanced production capacity to AI storage, squeezing the supply of consumer-grade DRAM and NAND.

The problem? HBM and smartphone memory use the same wafers and production lines. Every wafer diverted to AI data centers means one fewer wafer for smartphone memory. This isn't a cyclical shortage but a strategic reallocation of global silicon capacity.

TrendForce data shows that DRAM contract prices skyrocketed 90–95% quarter-over-quarter in the first quarter of 2026, narrowing to 13–18% in the third quarter but never reversing course. By late September, DDR4 8Gb spot prices climbed from $3.2 in late 2025 to $22—a 590% increase.

Beyond memory, the cost of 2nm manufacturing is soaring. TSMC's 2nm wafer prices approach $30,000 per unit, up around 50% from 3nm. NVIDIA, now TSMC's top client ahead of Apple, prioritizes AI chips for 2nm lines, further weakening the smartphone industry's bargaining power.

The share of memory in the total device bill of materials (BOM) costs provides stark evidence. Counterpoint estimates that DRAM and NAND combined accounted for 13% of smartphone material costs in the first quarter of 2025 but surged to 49% in the second quarter of 2026. DRAM overtook SoCs as the priciest single component in flagship phones. Low-end models under $200 saw BOM costs rise 70% year-over-year, almost entirely due to memory—explaining why budget phones vanished first.

Manufacturers' Ledger: Higher Prices, Then What?

Smartphone average prices are rising while sales fall—a consensus. But a more pressing question remains: Are manufacturers profiting from these hikes?

Huawei's Richard Yu put it bluntly. At a late-September international media roundtable, the Terminal BG chairman admitted Huawei's profit struggles: "Sharp memory component price hikes added over $200 in costs per phone. We tried absorbing them, but profit margins are collapsing." His tone was grave: "The company must survive first."

Huawei has Kirin chips, HarmonyOS, and China's most complete domestic supply chain—yet even it can't withstand memory price surges. When Yu said "price increases are unavoidable," his tone lacked any hint of opportunistic profit-taking.

OPPO's situation highlights the vulnerability of brands reliant on mid-to-low-end models. In the second quarter, OPPO's global shipments fell 17.5% year-over-year, with market share dropping from 11.7% to 10.4%. It raised average selling prices by 9%—but Counterpoint data shows revenue still declined 10%. Volume drops outpaced price hikes. OPPO CPO Pete Lau admitted at an April launch event: "Industry-wide price hikes this year have put significant cost pressure on OPPO... We cannot guarantee no further price increases this year." That statement speaks louder than numbers.

Samsung provides a cross-brand reference. As the only company with both memory chips and smartphones, it should theoretically best withstand price hikes. Yet in the third quarter of 2026, Samsung's mobile division is projected to lose 1.9 trillion won (~$9 billion) in operating profit, with overall phone profitability under severe threat. South Korean media reports that Samsung plans to cut Galaxy smartphone production by up to 30% in the fourth quarter of 2026, reducing annual output from around 270 million units to just over 200 million. While Samsung's memory division profits, its phone division bleeds—even a vertically integrated player can't sustain losses. Other manufacturers face even grimmer realities.

Together, these cases point to one conclusion: Android vendors collectively earn just 5–8% net profit margins, while memory chips account for 30–50% of total device material costs. Apple, with 38.7% hardware margins and over 75% service margins, can offset hardware pressures with service revenue and ecosystem loyalty. Android brands lack this buffer. Apple captures over 80% of global smartphone profits, while Xiaomi, OPPO, and vivo—despite combined shipment shares exceeding Apple's—earn a fraction of its profits.

Thus, this round of price hikes isn't manufacturers exploiting consumers but manufacturers transforming from "price setters" to "price takers." Their negotiating power with memory suppliers has diminished, while their dominance over customers has waned. Consumers feel the pain, but manufacturers suffer more acutely.

2nm: Flagship Phones Segmented by Price

If cost inflation drives this transformation, 2nm chips are the needle piercing industry norms.

For a decade, an unspoken rule existed: flagship phones must feature the latest, strongest SoCs. You could cut cameras or screens, but not the chip—the definition of "flagship."

In 2026, that line broke.

Second-half flagship chips fully adopted 2nm processes—Apple's A20 Pro, Qualcomm's Snapdragon 8 Elite Gen 6, MediaTek's Dimensity 9600. But consumers quickly noticed that only Pro or Pro Max variants got full-spec 2nm chips. Standard editions either downgraded specs or reused older platforms. Take OPPO's Find X10 series: the E variant used a downclocked Dimensity 9500s, the standard version got the Dimensity 9600M, and only the Pro Max featured the full-spec 2nm Dimensity 9600 Pro. Vivo's new flagships followed suit.

For the first time, 2nm chips split "flagship" into two tiers: full-spec flagships and nominal ones.

This reshaped pricing logic. The 12GB+256GB Xiaomi 18 Pro sold for 5,999 yuan, the OPPO Find X10 Pro Max for 6,799 yuan, and the iPhone 18 Pro for 9,999 yuan. With costs soaring, prices targeted only consumers willing to pay for the latest nodes.

This explains why brands rushed launches before National Day. Supply chain insiders say with little room for price cuts, companies prioritized securing sales first—a reversal from past strategies where early launches aimed to capture discount-driven demand. Now, they race to lock in sales before further hikes.

"Volume-for-price" isn't disproven; manufacturers simply can't afford price wars anymore. Past discounts were strategic, with controllable costs and sufficient profit margins. Today, with memory costs quadrupling, every price cut risks losses. It's not that brands won't compete on price—they can't.

The Exit of Budget Phones: How Long Must Waiters Wait?

So, how long must price-conscious consumers wait?

First, observe the market's transformation. Budget phones have all but disappeared—IDC data shows sub-$150 models collapsed from 22% of new launches in 2023 to 2.7% in the first quarter of 2026, with entry-level prices now typically exceeding $225–$280. The era of cheap smartphones is ending. Competition shifts from "who's cheaper" to "who's irreplaceable": imaging, AI, ecosystems, and foldables force vendors to focus on premium-generating features.

This hints at a healthier industry—if you survive. The winners won't be the cheapest but the most indispensable.

But consumers face a colder reality. Back to Xiao Zeng's question: Will prices ever drop?

Analysts aren't optimistic. CITIC Securities expects new memory capacity to materialize only by late 2027 to 2028. TrendForce offers a nuanced view: DRAM will remain tight in 2027 due to HBM capacity crowd-out, but NAND Flash supply should loosen in the second half of 2027 as new production capacity comes online.

Domestic memory alternatives are progressing but can't immediately solve the crisis. Yangtze Memory's 232-layer 3D NAND is in mass production, and OPPO/Vivo have rejected Samsung's price hikes to negotiate with domestic suppliers. Apple is also evaluating Yangtze Memory NAND for China-exclusive iPhones. However, meaningful supply chain shifts may only occur after 2027–2028, assuming Yangtze Memory achieves high-spec mass production.

The fact that even old models now cost more means "waiters'" last refuge—buying last-gen devices—is gone.

Waiters like Xiao Zeng lose more than $100. They lose an era's premise: technological progress guarantees price drops, delayed purchases yield discounts, and patience always pays. This premise relied on Moore's Law driving chip costs down, persistent overcapacity, and manufacturers relying on price wars to clear inventory.

AI rewrote those rules. It claimed wafers, capacity, and the certainty that waiters once took for granted.

Xiao Zeng eventually closed his phone app. Undecided on whether to make a purchase, he knew one thing: the version of himself who believed "waiting makes things cheaper" must retire temporarily.

Over the next two years, smartphone makers must learn to thrive with high costs and premiums, while consumers adapt to prolonged price hikes. The only thing waiters can do is hope AI's infrastructure frenzy fades and foundries remember that billions of phones still need memory.

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