AI Seizes Memory Capacity, Chinese Smartphone Brands See Sharp Decline in Shipments
Taylor Wilson
AI servers are devouring memory capacity so fast that phone-memory costs have surged nearly 300% in a year. Xiaomi, OPPO, and vivo saw combined Q2 shipments plunge 22% year-on-year — the cost structure of affordable smartphones is being rewritten, and Chinese brands are taking the first hit.
Why did memory prices spiral out of control?
AI servers need massive amounts of high-bandwidth memory, crowding out supply meant for phones and PCs. This means → phone makers are now competing with AI data centers for the same chips.
In H1 2026, mobile LPDDR4X and LPDDR5X prices rose over 130%; eMMC and UFS storage jumped more than 160%.
IDC estimates memory costs are up nearly 300% year-on-year. In some budget smartphones, memory now accounts for over 65% of total component cost.
In plain terms = in a $150 phone, memory alone eats most of the parts budget — margin is virtually zero.
Who got hit hardest, and who actually gained?
Xiaomi shipped 31.2 million units in Q2, down 26% YoY. OPPO fell 17% to 28.8 million; vivo dropped 19% to 21.2 million — together they sold roughly 23 million fewer phones.
The flip side: Samsung reclaimed the top spot with a 24% global share. Apple grew shipments 3%, lifting its share to a record 20%.
This reflects a clear dividing line — premium brands can pass cost increases to consumers; mid-to-low-end brands can neither raise prices nor absorb the cost.
Inside China, the split runs the same way — Huawei's share rose to 23% (highest since Q4 2020), Apple climbed from 15% to 18%, while Xiaomi, OPPO, and vivo all slid.
How are manufacturers responding — spec cuts or price hikes?
Some makers are quietly trimming specs: models that shipped with 8 GB of memory are now at 6 GB; some 6 GB models have been cut to 4 GB.
Entry-level lines can absorb the squeeze, but mid-to-high-end models have little room to downgrade. This means → retail price increases are nearly unavoidable.
OPPO and vivo have reportedly refused Samsung Electronics' further Q3 memory price hikes — but in a seller's market, rejecting the price usually means buying less, not getting a discount.
Xiaomi raised its shipment target — is that a recovery signal?
Xiaomi reportedly lifted its 2026 smartphone shipment target from roughly 90 million to 110 million units. The market initially read this as a sign that supply is improving.
Supply-chain sources say the move is more a correction after excessive cuts — Xiaomi's original target was about 170 million, trimmed to 135 million in January, cut again in June. The latest figure is still roughly 35% below last year.
In plain terms = going from "cut to the bone" back up a notch is not the same as a recovery.
Is the PC market feeling the same squeeze?
In Shenzhen's Huaqiangbei electronics market, memory sticks that sold for about ¥300 now go for roughly ¥1,000. Vendors say it is the steepest surge in over a decade.
Demand for second-hand DDR4 and DDR5 modules has picked up noticeably — some consumers are pulling memory from old PCs to resell, using the proceeds to offset new-device costs.
Apple, Huawei, and Xiaomi have all raised laptop prices to varying degrees, with notebooks seeing the sharpest increases.
What should we watch in the second half?
Industry sources project global smartphone shipments will fall roughly 12% in 2026, landing near 1 billion units for the full year.
LPDDR5X supply is especially tight because server-side demand remains strong. The inventory buffers brands built in late 2025 through early 2026 are largely exhausted.
This means → whether peak-season restocking in H2 can push supply and demand back toward balance will determine how far this premium-up, budget-down divergence runs.
Content is for reference only, not financial advice.