Get Ready, Cheap Chinese Phones Will Soon Be a Thing of the Past
The golden era of cheap Chinese-made smartphones, promising “high specifications at low prices”, is now on the brink.
For more than a decade dominating the global market, this business model relying on thin margins is beginning to falter under immense pressure.
The main triggering factor is the surge in memory chip prices due to the worldwide AI boom. This situation is then exacerbated by geopolitical tensions disrupting the global semiconductor supply chain.
If this trend continues, analysts predict the smartphone industry will enter a new grim phase. Cheap phones will no longer be pocket-friendly, and they will gradually become increasingly scarce in the market.
Signs of this crisis were already evident at the Mobile World Congress (MWC) held in Barcelona earlier in March.
Several vendors showcased their latest devices, but they appeared confused about setting final prices. Normally, retail prices are locked in well before products are announced.
Xiaomi, for instance, boldly announced its latest phone series at 999 euros (approximately Rp 19.5 million) on stage.
However, analysts believe this price is very likely to be revised when the product actually hits the shelves. This situation is purely due to the wildly fluctuating costs of the main component, namely memory chips.
AI servers require high-speed memory known as high-bandwidth memory (HBM), which is typically paired with leading graphics processing units (GPUs) like those from Nvidia.
In response to this high demand, major memory producers such as Samsung Electronics, SK Hynix, and Micron Technology have swiftly changed course. They have redirected much of their production capacity from conventional memory (for phones and PCs) to AI server-specific memory, which is more profitable.
The impact is fatal: supplies of memory for consumer devices like smartphones and laptops have become extremely scarce.
Research firm TrendForce notes that DRAM (main memory/RAM) prices have skyrocketed by 90-95% in just one quarter. Meanwhile, NAND flash (internal storage memory) prices have jumped 55-60% in the same period.