Summary of Key Points
In September this year, domestic smartphone manufacturers held a flurry of press conferences (Huawei, Xiaomi, Apple, and others all within a month). The main reasons were to seize the market opportunity before Apple's launch, to cope with the soaring costs of memory chips, and to adjust to the more relaxed product release pace in the first half of the year. At the same time, flagship phones generally saw price increases (each model costing 1,000-2,000 yuan more than the previous generation), with each company relying on technological innovations (self-developed chips, new manufacturing processes, foldable designs) to justify the higher prices. The "wide-fold" design has become a new battleground, with Apple entering the market to capture a mature segment, while Huawei has left an option for a "standard wide-screen" model. Behind this is a collective anxiety among manufacturers regarding shipments: brands like Xiaomi have seen declines in sales and profits, and the power to negotiate with suppliers has become more uneven (Apple and Huawei have long-term contracts for guaranteed supply, while other companies are forced to raise prices). Consumer willingness to upgrade their phones is also low.
Why were there so many smartphone conferences in September?
The number of smartphone conferences in September was much higher than in previous years: Huawei released two phones in one day (a triple-fold and a standard wide-screen model), Xiaomi launched its first wide-fold phone 24 hours before Apple, and companies like Apple, OPPO, and vivo also all held conferences in the same month. This was not a coincidence but was driven by three factors:
1. Seizing Apple's attention: Apple held its conference on September 10th, with pre-orders starting on the 12th. Xiaomi scheduled its conference for the 8th, aiming to attract users' attention and secure orders before Apple's momentum built (for example, users with limited budgets might buy a Xiaomi first, leaving them without the money to buy an Apple later).
2. Pressing from supply chain costs: The price of memory chips has skyrocketed, increasing from 10% to 34% of the total cost. To avoid further increases, manufacturers quickly released new products to pass on the higher costs to consumers.
3. A leisurely first half of the year: There were fewer new projects among smartphone manufacturers in the first half of the year, giving them more time to prepare for new releases and compressing what would normally be spread over three months into one.
Memory chip prices have gone wild! Manufacturers are raising prices collectively
This price increase is no small matter:
- Old flagships were the first to rise: On September 1st, the entire Huawei Mate80 series saw price increases of 800-1,000 yuan, with the top-of-line model approaching 10,000 yuan; Xiaomi and Honor also followed suit.
- New flagships are even more expensive: The standard version of the Xiaomi 18 is expected to cost 5,499 yuan (1,000 yuan more than the previous generation), while Apple's foldable phone has a starting price of 15,000 yuan (the most expensive iPhone in history), and OPPO and vivo's foldable phones have also seen price increases of 1,000-1,500 yuan.
- Production volumes have been cut: Due to high costs, many manufacturers have reduced the production plans for their flagship phones by 30%-50% (for example, they originally planned to sell 1 million units but now only produce 500,000).
Why such drastic price increases? Memory chips are the culprit; even Tim Cook described the situation as a "once-in-a-century flood," with even entry-level phones now costing over 1,500 yuan in memory. E-commerce platforms are even urging consumers to buy now, saying "if you don't buy this year, prices will be even higher next year."
Raising prices comes with a reason! Each company is pulling out its best technical cards
Why should consumers pay more? Manufacturers are using technology as their selling point:
- Apple: Launched the A20 Pro chip using TSMC's 2nm manufacturing process (the most advanced smartphone chip available), and its foldable phone features a wide-screen design that is more convenient for daily use.
- Xiaomi: Used its self-developed "Xuanjie O3" chip for its first wide-fold phone (skipping the O2 generation to directly call it O3, emphasizing a technological leap), and also secured the global premiere of LPDDR6 memory (faster than Qualcomm's).
- Huawei: Applied the "Tao Law" – without advanced lithography machines, they stacked transistors in two layers, bringing the manufacturing process to near 3nm levels (the new Kirin chips in the Mate90 series are a result of this); they also released a triple-fold phone (currently only Huawei can produce this).
- OPPO: Held a system conference first (ColorOS17), using the user experience as a selling point.
These technologies are all designed to make consumers feel that the price increase is justified – after all, no one wants to pay more for the same old products.
The wide-fold design has become a new battleground: Apple is entering to capture the market, while Huawei retains an option
The focus this year on foldable phones is on the "wide-fold" design (wider screens, better for watching videos and multitasking):
- Apple's entry: They are entering the market when it is mature (letting other companies "cultivate" the user base first), aiming to capture 25% of the global foldable phone market in the first year (surpassing Huawei's 24%). Their customers are willing to pay more, so they are not worried about sales; even their distributors expect to raise prices.
- Huawei's strategy: As a pioneer in wide-fold phones (the Pura X sold 1.5 million units), Huawei also released a standard wide-screen model (Pura X View) because many users use cases to convert foldable phones into standard screens. By offering both, Huawei meets the needs of different customers.
- Xiaomi's strategy: Held its wide-fold conference the day before Apple's, hoping to leverage Apple's popularity to boost sales of its own foldable phones.
However, the foldable phone market is still growing, and it's not a zero-sum game – consumers generally do not switch brands (for example, they will still buy from Xiaomi if they are already using one). Therefore, Apple is more of a participant than a competitor.
No one can afford to miss out: Behind the frequent conferences and price increases is collective anxiety among manufacturers
The frequent conferences and price increases reflect the overall anxiety of manufacturers:
- Xiaomi is the most anxious: Their smartphone revenue decreased by 7.5% in the second quarter, with shipments falling by 26.5%, and their gross margin dropped from 11.5% to 8.5%. Selling lower-end phones in overseas markets means greater cost pressures due to memory price increases, so they are relying on flagship phones to turn things around (Lu Weibing stated that "flagship phones will determine the company's performance in the second half of the year").
- Huawei is also worried: Their share of the domestic foldable phone market has dropped from 75% last year to 60% this year, with Honor taking a significant share. With Apple entering the market, Huawei may lose market share globally, so they are using a variety of models (triple-fold, wide-fold, standard wide-screen) to demonstrate their technological prowess.
- Apple is not in a comfortable position: Their new CEO launched the most expensive product, with only a 65% yield rate for the 2nm chip (fewer qualified units), and the AI features are still missing in the Chinese version. Additionally, foldable phones may attract customers away from their Pro Max models.
- Consumers are hesitant: Consumers only upgrade when their phones are seriously damaged; the 618 shopping event has already exhausted a lot of demand, and price increases may further delay upgrades.
The supply chain situation is even more competitive: Apple and Huawei have long-term supply contracts (Apple's memory contracts have doubled in price but ensure supply), while other companies can only sign short-term agreements (one quarter at a time). Those with more bargaining power in the supply chain will survive.
In summary, the smartphone market in September was characterized by "costs forcing price increases, technology supporting higher prices, and everyone competing for time – no one can afford to miss out." Should consumers buy new phones? It depends on whether these technologies can truly meet their needs; after all, the extra cost will ultimately come out of their wallets.