Summary of Key Points
September of this year was traditionally the time for digital product manufacturers to launch price discounts and promotions to kick off the new academic season. However, the entire industry did the opposite: prices increased across all categories, from budget-friendly phones to high-end flagship models, ranging from thousands of yuan to tens of thousands of yuan. Even the second-hand digital market saw a general price rise of 100-500 yuan. This price surge is not the result of manufacturers colluding to exploit consumers. The main reason is the explosive demand for AI computing power, which has overtaken the production capacity originally allocated to consumer electronics for memory chips. The top global memory manufacturers have already secured all the high-end production capacity for the next 2-3 years, and there are no signs of a price decline in the short term. As a result, mid-to-low-end digital products, which are more sensitive to budget constraints, are being hit much harder than high-end models.
---
Detailed Analysis
1. How Unusual is This Price Surge?
This year's price increases are unprecedented, with even existing models seeing immediate price hikes, and the second-hand market being affected accordingly:
- Many models that have been on the market for half a year have seen sudden, unexpected price increases. For example, the Huawei Mate80 series has seen a price increase of 800-1000 yuan, with the top-of-the-line model rising from 8999 yuan to 9999 yuan; the Xiaomi 17 series has increased by 1000 yuan, some laptops have increased by 500 yuan, and the Lenovo Xiaoxin Pro16 has increased by 1500 yuan in just three months. Some HP models have seen a cumulative price increase of nearly 30% this year.
- The price increases affect all price segments. Entry-level HP laptops that used to cost around 3000 yuan are now approaching 6000 yuan, some OnePlus models have increased by up to 1000 yuan, and even the Redmi series, known for its cost-effectiveness, has seen several price hikes.
- The second-hand market has also been affected, with prices rising by 100-200 yuan for used phones and laptops. The increase in the resale value means that selling an old phone can now yield more money than half a year ago.
- Interestingly, while in previous years, consumers would rush to buy products before prices went even higher, this time they are opting to wait and see. After price adjustments in physical stores, few people inquire about prices; most people choose to continue using their old phones and computers, waiting for prices to drop.
2. The Price Hikes Are Not Due to Manufacturers' Malicious Intentions; AI Companies Have Driven the Demand for Memory Chips
Many assume that phone brands have colluded to raise prices, but in reality, manufacturers are also being forced to bear the costs. The root cause lies with the chip manufacturers:
Imagine a bakery: previously, half of the production line was used to make plain bread (the type of memory used in phones and computers), while the other half made cream bread, which had lower profits but higher sales volumes. Recently, a large number of AI companies have entered the market, willing to pay five to ten times the usual price to secure all the production capacity for high-end custom memory chips needed for AI servers. The profit from producing one such chip is equivalent to that from ten plain bread slices. As the bakery owner, you would naturally want to shift all production to this more profitable venture.
The world's three largest memory chip manufacturers—Samsung, Micron, and SK Hynix—have already secured all their production capacity for HBM chips for 2026, and even the capacity for 2027 has been booked. The remaining capacity for ordinary memory chips is dwindling, leading to a five- to six-fold increase in prices. Even Apple, which is known for pressing down on supply chain prices, cannot withstand this trend and has complained about a "once-in-a-century" shortage of memory chips. Micron previously criticized Apple for keeping memory prices at one-third of the market level; now, Apple is also forced to raise prices to cover its costs.
3. Don't Expect Short-Term Price Drops; This Surge Will Last at Least Until 2027
Some might think that chip manufacturers could simply increase production when they see rising memory prices, but it's not that simple. Building a memory chip factory is thousands of times more difficult than opening a bakery:
It takes at least 2-3 years to build a chip factory, from laying the foundation to deploying production lines. The core production equipment, such as lithography machines, takes a year to order and deliver, and even after production begins, it takes time to optimize the process and obtain customer certifications. It's not something that can be expanded quickly.
For example, Micron announced a new factory in 2022, which was originally scheduled to start production in 2025 but has now been postponed to 2027. A giant wafer factory with a total investment of 100 billion dollars is only just beginning construction and will not start production until 2030.
Moreover, even if new capacity is available, chip manufacturers will prioritize producing the higher-profit HBM chips for AI applications, not the less profitable ordinary memory chips. SK Hynix's CEO has predicted that next year will see the largest shortage in memory chip supply, and the price increases for ordinary memory chips are likely to continue indefinitely.
4. The Biggest Victims Are Not High-End Consumers
The impact of these price hikes is not evenly distributed; the cheaper products are being affected the most:
- Consumers of high-end Huawei and Apple products are less sensitive to price increases, and such increases won't deter them. High-end brands have high profit margins and can absorb some of the cost increases without passing them on to consumers.
- Mid-to-low-end brands, which focus on cost-effectiveness, have very low profit margins. For example, Xiaomi's mobile business has a gross margin of only 8.5%, and any increase in memory costs significantly affects their profits. They have no choice but to pass on the increases to the prices of their products.
- For low-end digital products, while screen and camera components can use cheaper alternatives to reduce costs, memory is a essential component. Unable to use less expensive memory, the cost of memory accounts for a larger proportion of the overall cost of these devices. This leads to absurd price increases, such as entry-level laptops rising from 3000 yuan to 6000 yuan, affecting consumers with limited budgets who were planning to buy affordable products.