The more expensive smartphones get, the more anxious manufacturers become.
As more than half of 2026 has passed, the mobile phone industry is experiencing the most significant cost shock and price system reconstruction since the birth of smartphones. On one hand, domestic mainstream brands such as OPPO, vivo, and Honor have successively issued price adjustment announcements, with the prices of mid - range models generally increasing by 300 to 1000 yuan. On the other hand, Apple launched its largest - scale price cut promotion in recent years before the 618 shopping festival. The iPhone 17 Pro series saw a direct price reduction of up to 1000 yuan. What's more intriguing is that Huawei chose to maintain the price or even lower the price of the Pro version during the launch of the Pura 90 series in April. However, in June, the nova 16 series had to follow the trend and increase the price by 300 to 500 yuan.
Behind the apparent changes in terminal prices lies a set of more severe industry data. According to the latest report from Counterpoint, the global smartphone shipments in 2026 are predicted to drop by 13.9% year - on - year, falling to approximately 1.08 billion units, hitting the lowest annual level since 2013. This decline is an expansion from the previously predicted 12.4% and is regarded by the industry as the "largest decline in history." Meanwhile, the average wholesale price of global smartphones has increased by 14% year - on - year - a situation of decreasing volume and increasing price.
The upstream feasts, while the downstream can't even get a taste
To understand the root cause of the mobile phone price increase in 2026, we must start with the imbalance between supply and demand of memory chips.
If we use a picture to describe the profit distribution in the current semiconductor industry chain, it might be like this: The three memory giants, Samsung, SK Hynix, and Micron, are sitting in the middle of the dining table, with a sumptuous feast in front of them. Mobile phone manufacturers are huddled in the corner, dividing up the breadcrumbs that fall from the table.
Since the second half of 2025, the accelerated expansion of generative AI from cloud - based training to inference applications has spawned an explosive demand for HBM (High - Bandwidth Memory). The three major memory manufacturers, Samsung, SK Hynix, and Micron, have shifted a large amount of advanced - process production capacity to HBM. This type of memory chip used in AI servers has a unit price of hundreds of dollars, with rich gross profit, and the order schedule has extended beyond 2027. Meanwhile, LPDDR memory and NAND flash memory required for consumer electronic devices have become the direct victims of production - capacity squeeze.
You can understand how profitable the upstream is by looking at Samsung's financial report. In the first quarter of 2026, Samsung Electronics released a "super quarterly report" that will go down in the company's history: The consolidated revenue reached 133.9 trillion won, a year - on - year surge of 69%. The single - quarter profit exceeded the total profit of the whole year of 2025. SK Hynix is no less impressive. In Q1, SK Hynix's operating income was approximately 52.58 trillion won, and its sales volume exceeded the 50 - trillion - won mark for the first time. With a net profit margin of up to 77%, it even exceeded the level of NVIDIA's latest fiscal quarter.
The rapid growth of performance has directly translated into real money in the employees' pockets. Samsung announced an excess - profit incentive plan for 2025 at the beginning of the year. The bonus payment ratio for employees in the semiconductor division reached 47% of their annual salary, equivalent to nearly half a year's salary. SK Hynix was even more generous: The total performance bonus for 2025 issued at the beginning of 2026 reached 4.72 trillion won, with an average of approximately 650,000 yuan per person. After the news spread, there was a joking saying on Korean social media: The work uniforms of SK Hynix employees have become a "dating weapon."
The stock prices have also skyrocketed. On May 6, 2026, Samsung Electronics' stock price soared by nearly 16% during intraday trading and closed up 14.41%, with its market value breaking through the $1 - trillion mark. It became the second Asian technology company after TSMC to cross the $1 - trillion market - value threshold. On June 1, the total market value of Samsung Electronics' common stock exceeded 2000 trillion won for the first time, and the closing market value climbed to 2219 trillion won, approximately equivalent to 9.95 trillion yuan. SK Hynix's rise was even more ferocious - it skyrocketed by 274% in 2025 and soared by more than 200% in 2026. On May 26, its stock price reached the 2 - million - won range, and its market value also exceeded the $1 - trillion mark. The strength of these two stocks not only pushed the South Korean KOSPI index to a record high of 8788.38 points but also directly propelled South Korea to surpass India and become the world's sixth - largest stock market by market value. Micron Technology's stock price also continuously hit record highs, rising by more than 160% this year, and its market value is approaching $850 billion.
However, the situation on the other side of the dining table is completely different.
Mobile phone manufacturers are having an unprecedentedly tough time. In the first quarter of 2026, Xiaomi's smartphone business revenue was 44.3 billion yuan, a year - on - year decrease of 12.5%. The shipments dropped sharply from 41.8 million units to 33.8 million units, a decrease of nearly 20%. The gross profit margin of the smartphone business dropped from 12.4% to 10.1%. Transsion is in an even worse situation. This "King of Africa," which started in the low - cost African market, highly depends on models priced below $150, and its annual shipments are expected to plummet by 32%, the largest decline among leading manufacturers. Honor is expected to decline by 20%, and OPPO and vivo are also facing double squeezes on shipments and profits.
What's even more frustrating is that the price increase of mobile phone manufacturers is not due to product upgrades but is forced by the upstream. According to data from CINNO Research, the cost of the mainstream 8GB + 128GB storage combination for mobile phones has increased by up to 290%. Previously, for a 2500 - yuan mobile phone, the storage cost was about 300 yuan, accounting for about 12% of the total cost of the device. Now, for the same storage specification, the cost has directly risen to 500 - 600 yuan, and the proportion has soared to over 20%.
So, Lei Jun said the well - known words at the Xiaomi product launch in May: "If you plan to change your mobile phone in the next year, I strongly recommend that you do it now." Some people think it's just a marketing tactic, but it's not. The subtext of this statement is that Xiaomi expects the upward trend of memory prices to last at least until the end of 2027.
Some rejoice, while some sorrow
Logically, since the cost of all mobile phones is rising, why not just increase the prices across the board? But reality is always more interesting than theory. Against the backdrop of the overall price increase in the industry, Apple's price - cut move is particularly eye - catching.
Apple launched the first official price cut for the iPhone 17 Pro series on its Tmall official flagship store, with a maximum discount of 1000 yuan. Before the 618 shopping festival, the price - cut intensity became even stronger: On the JD platform, the iPhone 17 Pro was priced as low as 6999 yuan, the standard version was 4499 yuan, the iPad Air 11 was as low as 3599 yuan, and the Apple Watch S11 was only 1788 yuan, with a maximum direct price reduction of 2000 yuan.
Analysts pointed out that there are several non - negligible factors for Apple to maintain a relatively flexible price strategy against the backdrop of the soaring memory prices: Firstly, compared with Android manufacturers, Apple has more advantageous long - term price - locking agreements with memory suppliers such as Samsung and SK Hynix, and has a stronger ability to hedge against cost fluctuations. Secondly, Apple's gross profit margin is significantly higher than that of its Android competitors. According to Counterpoint analysis, benefiting from a relatively stable chip supply and a significantly higher gross profit margin than competitors, Apple is in an advantageous position in the competition for market share and also faces relatively less pressure to increase the selling price. Thirdly, the user ecosystem of the iPhone has extremely high stickiness. Even with moderate price concessions, Apple can compensate through software service revenue. In essence, the price cut is a long - term strategy of trading market share for ecosystem development.
Let's look at Huawei. The Pura 90 series launched in April withstood the pressure of price increase. The starting price remained the same as the previous generation, and the price of the Pro version was even reduced by 1000 yuan. Yu Chengdong admitted at that time: "The average cost per unit has increased by about 1000 - 1500 yuan. This pricing is really our all - out effort." This confidence comes from advance stockpiling. Huawei stockpiled a large amount of inventory from the fourth quarter of last year to the first quarter of this year, which bought buffer space for subsequent new products. However, no matter how large - scale the stockpiling is, it can't support the entire product line. On June 1, the nova 16 series was launched as scheduled. The starting prices of 2999 yuan, 3899 yuan, and 4699 yuan were 300 yuan, 400 yuan, and 500 yuan higher than the previous generation respectively. Yu Chengdong had already given a warning on Weibo before the launch: "The cost of mobile phones has increased a lot. Later, Huawei won't be able to hold on and will also have to increase the price."
In the broader domestic mid - range market, the situation is more fragmented. The Honor 600 series, OPPO Reno16 series, and vivo S60 series have been launched one after another, sending a clear and common signal: Mid - range mobile phones are also increasing prices collectively. Facing the same cost pressure, each company has come up with different coping methods: OPPO chose to increase the price while adding more features - for the same price increase, you get a better screen and imaging system. Vivo opened up a new path by launching a low - cost version. It introduced a stripped - down version in addition to the original series to maintain the price line. Honor's strategy is to readjust the configuration, carefully weighing each trade - off while increasing the price. In any case, for a mid - range mobile phone with a standard 16GB + 512GB version, you may have to pay 1000 yuan more than the same series last year.
The 2nm is coming, but who can afford it?
If the price increase of memory chips is the most urgent crisis at present, then the process upgrade of logic chips is the next cost bomb on the horizon.
Qualcomm's flagship platform "Snapdragon 8 Elite Gen 6" in the second half of this year and MediaTek's Dimensity 9600 series are both planned to use TSMC's latest 2nm process (N2P). News shows that the cost of the first - batch 2nm flagship chips will be more than 20% higher than the existing 3nm solution. Currently, the estimated single - unit cost of the Snapdragon 8 Elite Gen 5 has reached $280, and it is almost certain that the 2nm version will exceed $300.
This is a suffocating price. A single processor plus a memory chip worth over $100 means that the cost of these two components alone is close to $400, equivalent to approximately 2900 yuan. In the BOM of a flagship mobile phone, chips and storage alone account for nearly 3000 yuan - and this doesn't include the screen, camera, battery, structural components, and all other materials.
Why is the 2nm so expensive? TSMC's price list is as follows: The single - wafer foundry price for the 2nm process reaches $30,000, 50% to 62% more expensive than the approximately $18,500 - 20,000 for the 3nm process. There are real technical reasons behind this. As TSMC shifts from the 3nm FinFET to the 2nm GAA transistor, it requires more lithography steps and a higher usage rate of EUV. The cost of the first - batch 2nm flagship chips is more than 20% higher than the existing 3nm solution, and it is almost certain that the 2nm version of the Snapdragon 8 Elite Gen 5 will exceed $300.
What's more severe is that even if manufacturers are willing to bear the high foundry cost, they may not be able to get the production capacity. TSMC's initial 2nm production capacity has been pre - occupied by global technology giants. Apple alone accounts for nearly half of the initial production capacity, mainly for the mass production of the A20 series chips. The remaining scarce production capacity has also been completely divided up by leading enterprises such as Qualcomm and MediaTek. Although TSMC is accelerating the expansion of its factory, it is expected that the monthly 2nm production capacity will climb to 100,000 wafers by the end of 2026, but it still cannot meet the soaring market demand, and the supply - demand gap persists.
Facing the sky - high cost and production - capacity dilemma of the 2nm process, industry manufacturers have started to cool down rationally and no longer blindly pursue the latest process. Most brands choose a practical and conservative iteration strategy. Xiaomi's self - developed Xuanjie O2 chip will continue to use TSMC's 3nm advanced process (industry news indicates N3P), which is also the mainstream choice in the current mobile phone industry.
Conclusion
On one hand, the sales volume continues to decline, and on the other hand, the hardware cost is rising steadily. With the superimposition of these two pressures, the current transformation in the mobile phone industry will not stop in the short term. For consumers, Lei Jun's advice of "change your phone now" may be the most practical one.
The author believes that the disappearance of budget phones may be the most silent but cruel outcome of this cycle. Since the launch of the Xiaomi 1 in 2011, Chinese consumers have enjoyed the dividend of continuously decreasing mobile phone prices for a full 15 years. Budget phones, ultra - cheap phones, and even contract phones given away for free have turned smartphones from luxury items into daily necessities. However, in 2026, this 15 - year downward curve has been abruptly reversed. The price of memory chips has tripled. No matter how much you compress the screen, reduce the camera, or use a plastic back cover, you can't fill this gap. The golden age of cheap mobile phones is over, and it may never come back. Now, if you want to buy a new mobile phone, you either have to accept a higher price or a lower - end configuration - there is no third option.
The annual shipment myths of 800 million, 1 billion, and 1.2 billion units probably won't return. However, against the backdrop of the sharp decline in shipments, concepts such as AI - powered phones, foldable screens, and 2nm chips, which were once distant, are accelerating their implementation. Price increases are inevitable, and upgrades are also happening simultaneously.
This article is from the WeChat official account "Semiconductor Industry Insights" (ID: ICViews), written by Fang Yuan and published by 36Kr with authorization.