The industry rule in the mobile phone sector that "buy later to get a discount" is completely breaking down under the pressure of rising upstream costs.
On August 2, the Xiaomi Mall completed a unified price adjustment, simultaneously raising prices for nine models across the Xiaomi 17 series, Redmi K90 series, and Turbo 5 series. The flagship Xiaomi 17 series saw price increases of 400–500 yuan, with the top-tier Xiaomi 17 Pro Max starting at 6,499 yuan, up from 5,999 yuan. Both Redmi product lines were uniformly increased by 300 yuan, pushing their starting prices above the 2,500-yuan threshold.
This is Xiaomi’s third price adjustment this year, as rising storage costs are gradually pushing up prices across its product lineup. The first round in March targeted entry-level models, the second in June covered mid-range devices, and the third in August reached the flagship series, fully illustrating the path of cost pressures rising from the bottom up.
Beyond price increases, Xiaomi phones are facing a decline in sales.
According to IDC data, global smartphone shipments in the second quarter of 2026 reached 277.5 million units, a 6.7% year-over-year decline. Xiaomi ranked third globally with 31.2 million units shipped, capturing an 11.2% market share, and remained the leading Chinese brand; however, its shipments fell 26.3% year-over-year, the steepest decline among the top five manufacturers.
Market pressure in China has been even greater. According to Omdia’s report, Xiaomi shipped 8.2 million units in mainland China during the second quarter, capturing a 12% market share and ranking fifth, a 21% year-over-year decline, placing it behind Huawei, Apple, OPPO, and vivo. This decline was driven both by reduced demand due to higher end-device pricing and Xiaomi’s strategic shift to reduce the proportion of entry-level models and upgrade its product portfolio. Meanwhile, Huawei and Apple, the top two vendors, saw year-over-year shipment growth of over 24%.
The direct driver of this price increase is the continuously rising cost of storage chips.
The surge in AI computing power demand has led major memory manufacturers such as Samsung, SK Hynix, and Micron to redirect their advanced production capacity toward higher-margin HBM (High Bandwidth Memory). This has continuously constrained the supply of consumer-grade DRAM and NAND.
Lu Weibing, President of Xiaomi Group, previously revealed at an open communication event that memory prices for the same configuration have surged nearly fourfold compared to Q1 2025; calculating based on the mainstream 12GB+512GB variant, the storage cost per device has increased by approximately RMB 1,500. According to IDC, consumer memory costs have risen nearly 300% year-over-year, accounting for over 65% of the BOM cost in entry-level smartphones priced under $200. He acknowledged that the smartphone industry is currently experiencing its most challenging period in nearly a decade, with the memory price increase trend expected to persist until at least the end of 2027, possibly extending into 2028. In the second half of this year, the prices of some domestic flagship smartphones may exceed RMB 10,000.
Facing dual challenges of rising costs and pressured sales, Xiaomi is proactively mitigating risks by increasing investment in self-developed chip technology and optimizing product storage configurations. The company is steadily advancing the mass production of its Surge series of in-house chips to reduce dependence on external procurement of core components, while also adjusting the capacity SKU structure and distribution ratios across different product tiers to minimize the impact of upstream cost fluctuations on end-user pricing and product competitiveness.
Xiaomi's price increase is not an isolated case.
Since March this year, major brands such as OPPO, OnePlus, vivo, and Honor have gradually increased prices for certain models. Apple also raised prices for its iPad and MacBook in June, with Cook explicitly stating that the price increase was “inevitable.” According to industry insiders, domestic mainstream brands may undergo a second round of price adjustments in the second half of the year, with expected increases ranging from 200 to 800 yuan.
A broad industry-wide price increase cycle has begun, and both manufacturers' product strategies and consumers' device upgrade decisions will be recalibrated in this wave of rising costs.
Source: Star River Business Insights
This article is from "ZAKER Finance"