Summary of Key Points
Recently, the smartphone industry has experienced a wave of collective price increases, with both domestic manufacturers and giants like Apple and Huawei being affected. The root cause is that AI has taken over the production capacity of upstream storage chips, leading to a soaring cost of memory used in smartphones. Despite the emphasis on AI by smartphone companies, it has not solved the cost issues, and consumers are not willing to pay more for phones just because they have an "AI label." Now, all major manufacturers are urgently seeking new sources of revenue (such as automobiles, robots, and imaging devices), but the industry's decline is becoming increasingly evident, and the competition in the existing market is becoming even more fierce. This ordeal has just begun.
Detailed Analysis
1. The Wave of Price Increases: Affecting Both New and Old Models
The price increase did not come suddenly; it started in the fourth quarter of 2025 with new models seeing increases (for example, the Honor Power2 rose by 500 yuan, and the Samsung S26 by 1000 yuan). By March 2026, even older models were affected (the OnePlus 15 series increased by 500 yuan, and the OPPO K series by 200-500 yuan). Initially, Huawei and Apple resisted raising prices, hoping to gain market share. In Q1, Huawei's market share returned to first place, and Apple saw a 42% increase in sales, while other brands (such as Xiaomi) experienced a 35% drop in shipments. However, by June, the Huawei nova16 increased by 300-500 yuan, and Apple also raised the prices of its Mac/iPad products. It is now clear that no major smartphone manufacturer has been spared, and an era of widespread price increases has begun.
2. The Culprit Behind Memory Price Increases: AI Stealing Memory Capacity from Smartphones
The main reason for the price increase lies in the upstream storage chips. With the surge in generative AI, there is a high demand for "high-bandwidth memory (HBM)," which is much more profitable than the memory used in smartphones. The three major memory manufacturers—Samsung, SK Hynix, and Micron—have shifted most of their advanced production capacity to HBM, leaving consumer-grade memory for smartphones as a casualty:
- Cheap LPDDR4 memory has been discontinued (Samsung stopped accepting orders in April, and Micron did so at the end of last year), leaving budget phones without affordable options.
- The price of more advanced LPDDR5X memory has skyrocketed (up 89% quarter-over-quarter), with even Apple having no bargaining power—Samsung initially proposed a 100% increase in February, which Apple accepted immediately (although Samsung only intended to raise the price by 60%).
The rise in memory prices is like a "super flood," putting immense pressure on smartphone manufacturers' costs.
3. Why Can't AI Save the Smartphone Industry?
Although smartphone companies talk about the benefits of AI, it does not address the core issues:
- AI features are currently more of a luxury addition rather than a necessity. For example, users are not willing to pay extra for smartphones with AI-powered cameras or assistants.
- AI has actually exacerbated the memory crisis by competing with smartphone manufacturers for memory capacity.
- Consumers' purchasing power has decreased due to rising memory prices, making them less inclined to upgrade their phones. Even if a phone is labeled with "AI," it won't deter them from holding onto their current devices.
In short, AI is more of a "beautiful bubble" that cannot save the smartphone industry from its current predicament.
4. Manufacturers' Strategies for Survival: Seeking New Revenue Streams
The smartphone business is becoming increasingly challenging, so manufacturers are exploring new growth areas:
- Huawei: Betting on its HarmonyOS for automotive applications, planning to launch 12 new cars in 2026, expanding from the Askolite series to the Zhijie and Xiangjie lines.
- Xiaomi: Its automotive business is thriving, with the SU7/YU7 selling well, generating 19.9 billion yuan in revenue in Q1, on par with its smartphone business. It has also introduced a range of extended-range vehicles.
- OPPO: Abandoned traditional home appliances like TVs and turned to handheld imaging devices (comparable to GoPro), but the results are not yet clear.
- vivo: Working on MR headsets (vivo Vision) and humanoid robots, though the MR market is not very receptive (even Apple's Vision Pro has struggled), and robots are still years away from becoming mainstream.
- Honor: One of the fastest-moving in robotics, releasing a humanoid robot in March and winning a half-mile robotics competition in April, but sales have not been significant.
5. The Decline of the Smartphone Industry: Fierce Competition in the Existing Market
The current state of the smartphone industry is as follows:
- Disappearance of Small and Medium-sized Brands: Meizu has stopped developing its own smartphones, and ASUS ROG has paused new model releases. The market share of small and medium-sized brands has dropped from 24.6% to 17.3%.
- Concentration of Market Power: Six major players (Huawei, Apple, Xiaomi, OPPO, vivo, Honor) control 94% of the market, but all are struggling. The decline in the smartphone business is irreversible, and new revenue streams have not yet become a significant source of income.
- A Difficult Cycle: The dual pressures of rising costs and declining demand cannot be resolved quickly. AI will not save the industry; manufacturers must find their own ways to navigate this cycle.
Smartphones remain important electronic products, but their status as a "sunset industry" is becoming increasingly clear. In the coming years, only those companies that can find reliable new sources of revenue will survive.
Final Conclusion
The smartphone industry is in a tough period characterized by rising costs, declining demand, and the ineffectiveness of AI in solving these problems. This battle has just begun.