Huawei warns of more smartphone price hikes as the memory chip crunch bites – Startup Fortune
Huawei is warning that the global memory chip crunch is adding roughly $200 to the cost of building each smartphone—and that consumers should prepare for further price increases as the shortage persists. With AI data centers gobbling up DRAM and NAND supply, phone makers are competing for fewer general‑purpose memory chips at sharply higher prices. Chinese rivals have already adjusted pricing, and even premium brands are paying more to secure components.
The company’s consumer chief, Richard Yu, said recent increases were only the beginning and that additional hikes are likely, though they will be kept as moderate as possible. The pressure is already visible on the bottom line: Huawei’s net income fell about 36% in the first half of 2026, a decline the company has linked in part to stockpiling components to get ahead of rising memory costs.
Price adjustments have arrived in key models. In September, several Chinese brands raised prices by roughly 200 to 1,000 yuan across select devices. Huawei’s Mate 80 Pro (12GB + 256GB) moved from 5,999 yuan to 6,999 yuan, an increase of about 1,000 yuan—roughly $140—on a single configuration. For consumers, this is the moment the AI memory supercycle stops being an abstract story about servers and starts appearing as a line item on a phone receipt.
What’s fueling the crunch? AI server farms are buying up vast quantities of DRAM and NAND, and manufacturers have shifted production toward high-bandwidth and advanced DDR5 memory for data centers. That pivot has constrained supply for smartphones, laptops, and game consoles. Industry trackers have noted contract prices for memory rising through the first half of 2026; in some cases, mobile DRAM prices jumped more than 80% in a single quarter.
The impact on a phone’s bill of materials (BoM) is stark. Industry estimates suggest memory and storage now account for more than 60% of the BoM in budget smartphones and over 30% in premium models. For devices priced under $200, the BoM has risen by about 20% to 30% since early 2026. That’s the difference between a sustainable margin and a loss—leaving brands with a choice: raise prices, cut specs, or absorb the hit.
Higher component costs are rippling across the market. Reports indicate that a major premium brand has agreed to pay roughly double for certain LPDDR5X modules used in new flagship phones—rising from around $30 to about $70 per 12GB module—with additional increases proposed for both DRAM and NAND heading into 2027. Deep‑pocketed companies can cushion some of those blows; manufacturers focused on mid‑range and budget segments have far less room to maneuver, which helps explain the synchronized price hikes seen in China.
Huawei is also framing the squeeze as a strategic shift. The company expects demand for low‑end devices to contract as rising costs push buyers toward mid‑range and premium tiers—areas where Huawei believes it competes most effectively. The math supports the view: a $140 increase barely dents a flagship’s margin, but it can erase profitability entirely on a $150 phone.
Looking ahead, memory makers and analysts see little immediate relief. Forecasts call for combined DRAM and SSD pricing to surge by well over 100% by the end of 2026 compared with a year earlier, which could lift average smartphone prices by around the low‑teens percentage points. Some suppliers caution the imbalance may persist well into the decade as AI infrastructure investment continues to outpace fab capacity. With AI customers willing to pay more for the same wafers, few manufacturers are rushing to expand general‑purpose memory output.
The bottom line: The AI buildout is no longer just a story for server rooms and chip stocks—it’s altering the economics of everyday consumer devices. For now, expect phone makers to keep nudging prices upward, prioritize configurations with higher margins, and limit ultra‑aggressive budget offerings. Unless memory supply loosens or demand normalizes, the price you see on the shelf next year may be higher still.
