Summary of the Key Points in Plain Language
This article clearly explains the unusual hustle and bustle in the smartphone industry in September 2026: In the past, manufacturers avoided Apple’s product launches as if they were avoiding creditors. This year, Huawei, Xiaomi, and Apple all squeezed three major launches into 72 hours, with six companies releasing over 20 new models within 30 days, completely disrupting the usual release schedule. Behind this apparent frenzy lies an awkward reality of intense competition in the smartphone industry where there’s little room for further growth. The production capacity for memory chips, a crucial component, has been taken over by the AI industry, forcing the entire sector to raise prices. Manufacturers are now relying on exaggerated AI specifications and new, foldable designs to attract customers, while practical technologies that could truly benefit users are being neglected. Fortunately, the government has introduced a series of national standards for AI-powered smartphones, providing a clear direction for the industry. The competitive landscape for smartphone manufacturers is about to change significantly.
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Detailed Explanation of Each Point
1. The industry-wide price increase is not due to manufacturers trying to make unfair profits; it’s because AI has taken over the market for memory chips
In the past, the competition in the smartphone industry was about who offered the best value for money. If a model with the same specs was available for 3000 yuan, a manufacturer could sell it for 2500 yuan and still gain a market share. This year, the situation has reversed. For example, Xiaomi’s new foldable phone has increased in price by 2000 yuan compared to its predecessor, and Huawei and vivo have also confirmed price hikes for their flagship models. Even Huawei’s MateXT2, which was previously priced at 19999 yuan, was described by Yu Chengdong as a “loss-making” product. The root cause of the price increase is not the manufacturers’ greed but the fact that memory chips (the memory used to store photos and run apps) are now being used by the AI industry. Global memory manufacturers like Samsung and Micron are focusing their most advanced production capacity on HBM high-bandwidth memory for AI servers, which generates profits 3-5 times higher than those used in smartphones. These memories are already reserved by cloud service providers like Alibaba Cloud and Tencent Cloud until 2027, leaving little capacity for the smartphone industry. As a result, the cost of 12GB of memory has risen from 200 yuan to 600 yuan, increasing the cost of a flagship phone by several hundred to thousands of yuan.
Consumer willingness to upgrade phones has hit a low, with the average replacement cycle in China exceeding 3.5 years, and global smartphone sales have decreased by nearly 17% year-on-year. Yet, the average price of phones has increased by 27%. Manufacturers have no choice but to either raise prices to cover costs or secretly reduce specifications and lower the quality of their products.
2. The AI features in half of the new phones are essentially just a form of “tax on intelligence”
In the past, smartphone launches focused on chip performance and camera resolution. Now, the competition revolves around the parameters of “on-device large models,” with claims of 7B, 13B, or even “trillion parameters.” However, 90% of these claims are misleading. The so-called trillion-parameter models are like claiming to have 1000 boxes of goods in storage but only using 7 boxes at a time; the actual performance difference from a 7B model is minimal. More absurdly, many features that existed ten years ago are now rebranded with AI labels and priced higher. For example, document scanning is now called “AI document processing,” and skin smoothing is called “AI image enhancement.” The built-in temperature control algorithms in phones are simply rechristened with an “AI performance engine” label, leading to claims of a 30% increase in frame rate, but users hardly notice any difference in real-world usage. Over half of the new phones on the market are labeled as “AI flagships,” but surveys show that 70% of users turn off most AI features within six months, and 26% of users never use them at all. These features are merely for show.
3. Amidst the chaotic competition, there are a few areas where manufacturers are actually doing something useful for users
Not all new features are just a form of deception. This year, there have been some positive changes that consumers can benefit from:
- The criteria for evaluating chips have changed. Manufacturers are no longer focusing on high single-core performance but are moving towards more balanced architectures that improve performance by 10%-15% while reducing power consumption by 25%-30%. This means phones are less likely to overheat and have longer battery life, which is a tangible benefit for users.
- There has been progress with domestically developed chips. Technologies like Huawei’s Kirin 9050Pro and Xiaomi’s Xuanjie O3 may not be immediately noticeable in daily use, but they represent control over core technologies, reducing dependence on foreign manufacturers and representing real progress for the industry.
4. The most valuable change this year: the government has set clear rules for AI-powered smartphones
Previously, the AI smartphone industry was full of exaggerated claims without any regulation. This year, the government has introduced a series of unique global standards, providing a clear framework for the industry:
- Phones are now classified based on their AI capabilities, from L1 (basic response) to L4 (advanced collaboration). The core criterion is whether they can actually complete tasks efficiently. Products that merely connect to cloud APIs cannot be labeled as AI flagships. Leading manufacturers have just obtained L3 certification, so when buying an AI phone, consumers can check the certification to verify its quality.
- Each AI feature is assigned a “digital identity” that specifies its permissions and the functions it can access on the phone. High-risk operations, such as transferring money or changing passwords, require user consent, preventing unauthorized actions.
- The government is also offering subsidies to consumers. For compliant AI phones priced under 6000 yuan, there is a 15% subsidy, up to 500 yuan, providing a direct benefit to consumers. This ensures that the competition is based on real improvements rather than empty promises.
5. There are only three viable paths for the smartphone industry to follow
The traditional approaches no longer work:
- Increasing hardware specifications is no longer effective, as even 2nm chips are standard, and further improvements are barely noticeable to consumers.
- Pricing cuts are impossible due to rising upstream costs.
- Focusing on foldable designs is also becoming less appealing as consumers have grown tired of the trend.
The real areas of competition will be:
- Energy efficiency: Consumers will favor phones that remain cool and have a longer battery life.
- Partnering with app developers to integrate AI services: Manufacturers that can integrate their AI assistants with app ecosystems to provide practical services like ordering food or checking deliveries.
- Implementing government-approved AI standards: Companies that effectively utilize these standards to offer useful features that truly benefit users will stand out. In the future, those that focus on hardware alone will be at a disadvantage as new intelligent devices emerge.