Recently, an institution released a chart showing average price changes for the top five smartphone brands.

As shown in the figure below, the global average phone price rose from $349 in Q3 of last year to $442 in Q3 of this year—an increase of 26.6%, or $93 (about 620 yuan).

Specifically, Apple saw the largest price increase at 18.5%, up $161 (about 1,070 yuan).

Samsung rose by $63 (about 420 yuan), or 20.7%. OPPO rose by $46 (about 310 yuan), or 20.8%, while VIVO rose by $38 (about 250 yuan), or 17.3%.

The most surprising is Xiaomi, which went from $148 to $210—an increase of $62 (about 410 yuan), or 42%, the highest percentage increase of all.

But if you think that such a big price hike would make Xiaomi's phones more profitable, you'd be mistaken. Xiaomi's phone prices did rise, but gross margin fell—and so did profit.

As shown in the figure above, this chart tracks revenue, gross margin, and gross profit for Xiaomi's phone business over the most recent five quarters, from Q2 2025 to Q2 2026.

As you can see, Xiaomi's gross profit and gross margin are far lower than a year earlier. In Q2 2026, gross profit was about 1.7 billion yuan less than in Q2 2025.

Why, despite such large price increases, did revenue decline, gross margin shrink, and profit fall? Because all the extra money from those price hikes went straight to upstream memory chip manufacturers—and the increased prices likely weren't even enough to cover this "memory tax," forcing Xiaomi to dig deeper into its own pockets.

Over the past year or so, prices for both DRAM memory and NAND flash have risen four to five times, and NAND + DRAM have already become the highest-cost components in phones.

With costs rising so sharply, phones had no choice but to raise prices. But because costs rose so much, the price increases still couldn't keep pace—so gross margin actually declined.

On top of that, higher phone prices led to lower sales. Judging from Xiaomi's data, global sales fell by more than 20% in each of the first three quarters.

So with sales declining and gross margin shrinking, even the higher prices weren't enough to offset the impact of rising memory chip costs—revenue fell, and profit fell with it.

This isn't just true for Xiaomi. Other domestic phone makers like OPPO and VIVO are in the same boat. Even Apple, the king of high-end phones, saw its gross margin decline. It's fair to say that in 2026, Lei Jun and others are really having a very hard time.