Lei Jun talks again about the surge in memory prices: The mobile phone business is under great pressure

On the morning of March 5th, according to China Youth Daily, Lei Jun, a representative of the National People's Congress and founder of Xiaomi Group, stated that the surge in AI demand has led to a sharp increase in storage chip prices. He said: “Our mobile phone business is under great pressure, and we will think of various ways to try to reduce the difficulty of acceptance for consumers.” This marks the third time recently that Lei Jun has publicly discussed the rise in chip prices. In October 2025, in response to the price increase of the Redmi K90 series smartphones, Lei Jun stated, “The recent rise in memory prices is indeed too much,” candidly admitting that the adjustment in product prices is due to the rising costs of upstream storage chips, which mobile phone manufacturers find difficult to fully absorb, necessitating price adjustments to cope. Public information shows that in October last year, Redmi raised the prices of the entire K90 series by 300-600 yuan compared to the previous generation, sparking discussions among users. In response to market feedback, Xiaomi quickly adjusted its strategy, announcing a price reduction of 300 yuan for the K90 standard version 12GB+512GB model within the first month of sales, adjusting the price to 2899 yuan. In January 2026, during a live broadcast discussing the costs of new models, Lei Jun again stated that the prices of storage chips have been rising quarterly, with an increase of 40%-50% in the fourth quarter of 2025, and expected to continue rising in the first quarter of 2026. If this trend continues, the annual cost of automotive memory alone could increase by thousands of yuan. Data released by the Price Monitoring Center of the National Development and Reform Commission on February 28 shows that as of January 2026, the prices of the two main global storage chip products, DRAM (memory) and NAND flash memory, have reached their highest levels since statistics began in 2016. For example, the spot price of mainstream DDR4 8Gb chips has soared from a low of $3.2 in 2025 to $15, with a cumulative increase of up to 369%. According to the latest news from the supply chain, the two major storage giants, Samsung Electronics and SK Hynix, have notified customers that they may continue to significantly raise DRAM memory prices in the second quarter of 2026, with a uniform price increase of about 40% for DDR5 chips. Together, they account for over 70% of the global DRAM market share. Since September 2025, storage chip prices have entered a continuous upward trend, with particularly remarkable price increases for the two core products, DRAM (memory) and NAND flash memory. Xiaomi Group partner and president Lu Weibing stated during the earnings call in November 2025 that this rise in storage prices is a “long cycle,” primarily driven by the surge in demand for HBM (high bandwidth memory) brought about by the AI technology revolution, rather than the traditional cyclical fluctuations in the mobile phone and laptop industries, with new output expected only by 2027. According to Blue Whale News, several industry insiders have stated, “March this year is a key node for mobile phone price increases. The price adjustments for models released earlier were relatively moderate, but for new products launched after March, the price increases will be significantly larger, with the minimum increase not less than 1000 yuan, and mid-to-high-end flagship models potentially seeing increases of 2000-3000 yuan.” According to the 21st Century Business Herald, the price increase of storage chips may lead to a reduction in the production of smartphones priced at around 1,000 yuan. An industry insider stated that manufacturers with smaller scales and products primarily positioned in the 1,000 yuan price range will face greater pressure. Omdia analyst Zhong Xiaolei also indicated that the price increase of storage chips significantly impacts material costs, potentially forcing models priced below $100 to face price hikes. For models priced above $200, although adjustments in peripheral configurations, channel subsidies, and marketing expenses can offset the cost increases, such adjustments in configurations may also affect the further penetration of AI smartphones by 2026 to some extent. Wells Fargo analysts noted in a research report that due to the surge in demand from data centers and artificial intelligence (AI) applications, the global shortage of memory chips has intensified, and smartphone and automotive manufacturers may face new cost pressures and potential supply disruptions. Wells Fargo also predicts that global DRAM demand will grow by about 26% next year, while supply is expected to grow by only about 21%, indicating a supply gap of approximately 14%. The report states, "As major suppliers in the smartphone and automotive industries, such as Micron Technology, Samsung, and SK Hynix, allocate production capacity to the faster-growing and more profitable data center market, smartphone and automotive manufacturers and suppliers may be forced to pay higher prices to ensure supply." Morgan Stanley pointed out in a research report released in January this year that the supply-demand gap for traditional storage chips continues to widen, and from the second quarter of 2025 to 2026, the industry will enter a new super cycle, with a tightening supply of memory products such as DDR4. “In January 2026, leading companies will have a positive purchasing attitude towards DDR4, and due to supply constraints, the price increase in the first quarter may reach 50%, with the upward trend continuing into the second quarter, affecting industries such as smartphones and automobiles.” The aforementioned research report shows. 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