China’s Xiaomi Corp. has cautioned consumers that its smartphones could become more expensive in 2026 due to the sharp increase in memory chip prices, driven largely by booming demand from the artificial intelligence (AI) industry.
Reason for price hikes: Global chipmakers, including Samsung Electronics, have shifted production capacity toward high-bandwidth memory (HBM) chips used in AI servers and data centers. This has reduced supply for conventional memory chips used in smartphones, pushing prices higher.
Xiaomi’s statement: At the company’s third-quarter earnings briefing, President Lu Weibing said: “I expect pressure to be much heavier next year than this year.” He acknowledged that while Xiaomi may raise smartphone prices, such measures will not fully offset the rising costs.
Consumer reaction: The warning comes after some buyers expressed disappointment at the higher price of Xiaomi’s new Redmi K90, which launched at 2,599 yuan ($364) compared to the 2,499 yuan starting price of its predecessor, the K80.
Industry impact: Analysts note that Xiaomi’s announcement reflects a broader challenge for smartphone makers worldwide, as AI-driven demand for chips reshapes supply chains and raises costs for consumer electronics.
Broader Context
AI boom effect: The surge in demand for chips powering AI servers has created a supply squeeze for mobile devices.
Smartphone market outlook: With global smartphone sales already under pressure from inflation and slowing consumer demand, higher prices could further dampen growth in 2026.
Competitors: Other smartphone makers, including Apple and Samsung, are also expected to face similar cost pressures, though their larger scale may help absorb some of the impact.
