Summary of Key Points
realme has announced the suspension of its operations in the Chinese market. This is not an isolated issue for a single brand but rather a reflection of the overall decline in popularity among smartphone sub-brands. In the past, these sub-brands were able to gain momentum quickly due to their cost-effective offerings, helping the main brands to dominate the market. However, the domestic smartphone market has now become increasingly concentrated around leading players like Apple and Huawei. The mid-to-low-end segment has shrunk due to soaring storage costs, eroding the cost-effectiveness of sub-brands. Meanwhile, the main brands have failed to make inroads into the high-end market. To reduce internal competition and maintain their core customer base, sub-brands have become expendable "pawns." realme is not the first, nor will it likely be the last, to withdraw from the market.
I. Sub-brands: From Powerhouses to Burdens
Sub-brands were once highly sought after by smartphone manufacturers. For example, in 2013, Redmi broke into the mid-to-low-end market with a product priced at 799 yuan (equipped with a processor typically found in phones costing 2000 yuan at that time), followed by Honor and Meilan, which even surpassed their parent brands in sales. Back then, it was an "era of growth"—everyone was buying new phones, and sub-brands could create additional market opportunities by launching multiple products.
Today, we are in an "era of saturation": consumers' replacement cycles have extended from 1-2 years to 3-4 years, and there are fewer new users entering the market. Products from sub-brands and main brands are becoming increasingly similar (for instance, both OPPO and realme focus on mid-to-low-end phones), leading to competition among them for the same customers. For example, sales of the Redmi Turbo 5 have dropped to only 60% of its predecessor's level, while the market shares of OnePlus and iQOO are also declining. Meilan has completely disappeared from the market—sub-brands are not only failing to help expand the market but are also causing internal strife, effectively becoming a burden on their parent brands.
II. Why Has the Cost-Effectiveness Advantage Disappeared Suddenly?
Sub-brands thrived on offering high-quality products at low prices, but rising costs for storage chips have eliminated this advantage. Since last year, the demand for storage chips from AI data centers has increased, driving up the price of memory used in smartphones by nearly 300%. In low-end phones, memory costs account for more than 65% of the total cost.
To illustrate: Previously, a 1000-yuan phone could generate a profit of 100 yuan; now, with memory costing an additional 200 yuan, manufacturers either have to sell the phone for 1200 yuan (losing its cost-effectiveness) or suffer a loss of 100 yuan. High-end phones (such as those from Apple and Huawei) can absorb these increased costs more easily. In fact, last year, Apple even managed to increase sales without raising prices, making its iPhones appear more affordable compared to domestic mid-range models. As a result, consumers find that the same budget allows them to get a better configuration with an iPhone from the previous generation than with a new domestic mid-range phone, effectively eroding the cost-effectiveness of sub-brands.
III. Have Main Brands Failed in Their Attempt to Move into the High-End Market, and Are Sub-brands to Blame?
The initial strategy behind creating sub-brands was to let them focus on the mid-to-low-end market while the main brands targeted the high-end (for example, OPPO used realme to handle the low-end segment and focused on its own Find X series for high-end products). However, the high-end market is now dominated by Apple and Huawei. In the first half of 2025, Apple held 65.8% of the market above 6000 yuan, while Huawei accounted for 24.4%, with Xiaomi, OPPO, and vivo combined accounting for only 6%.
The main brands' attempts to enter the high-end market have been unsuccessful, leading to the loss of their mid-range presence (for example, OPPO has dropped from the number one position in 2023 to fifth place in 2025). To survive, manufacturers must tighten their focus: they are shifting resources towards their own mid-range products, resulting in the elimination of overlapping segments with sub-brands. realme is a prime example of this strategy—OPPO needs to maintain its mid-range position, so it has had to discontinue operations in the Chinese market to free up resources for its own offerings.
IV. realme Is Not the Last; More Sub-brands May Disappear
The "cold winter" in the smartphone market has not yet passed. Storage chip prices continue to rise, and replacement cycles are lengthening, while Apple's dominance is growing stronger. For manufacturers, sub-brands that neither generate significant sales nor profits are simply a waste of resources.
For instance, there are rumors that Xiaomi's Civi series may be discontinued, and the market share of OnePlus is steadily declining. More sub-brands could follow realme's fate. The current strategy for manufacturers is to prioritize survival: they are cutting back on unprofitable sub-brands and investing in their main brands' core products, waiting for market conditions to improve before making a comeback. Therefore, realme's withdrawal from the Chinese market is just the beginning; more sub-brands may exit in the future.
In Conclusion
The "golden age" of smartphone sub-brands has come to an end, and we are now in a period of elimination. Those that survive will either need to find new ways to differentiate themselves (such as by focusing on niche markets) or be abandoned by their parent brands. For consumers, the number of mid-to-low-end options may decrease, but high-end phones are likely to become more cost-effective.