The 1000-yuan price segment smartphones are nearly disappearing. What on earth are mobile phone manufacturers afraid of?

People who intend to replace their mobile phones recently will find that new smartphones priced at around 1000 RMB are increasingly difficult to find.

Why? Because AI servers have taken up most of the production capacity of memory chips, pushing the price of mobile phone memory to rise sharply all the way.

For a 1000-yuan mobile phone, the memory module alone takes up most of the cost, and manufacturers lose money for every unit sold. Who dares to keep producing such products? As a result, low-cost phones are quietly removed from shelves, mid-range phones start to use repeated designs with minor adjustments, and the price of flagship phones remains firm. On the surface, it seems that manufacturers are picking and choosing orders, but in essence, the cost foundation of the entire mobile phone industry has been eroded.

Mid-range mobile phones will not disappear, since there will always be groups of consumers with limited budgets.

However, "new 1000-yuan mobile phones" will become a rare product, and mid-range demand will shift to second-hand devices, installment payment plans, trade-in programs and longer replacement cycles.

Using one mobile phone for three to five years is no longer a sign of being overly frugal, but a rational choice.

In my opinion, there is no winner in this industry retreat. The only difference lies in which manufacturer cannot hold on first and which can last longer. The mobile phone itself remains unchanged, but the entire industry operation logic has been completely overturned.

1000-yuan Phones Are Disappearing From Store Shelves

In the second quarter of 2026, the average selling price of mobile phones in the Southeast Asian market rose by 31% year-on-year to 342 USD, while the total shipment volume of the entire market dropped by 23%. What is more notable is that the absolute shipment volume of mobile phones priced above 100 USD also decreased by 2%. What does this mean? It means the price increase is not because consumers are buying more expensive phones, but because the supply of cheap phones has shrunk so rapidly that the average price is forcibly pulled up.

Xiaomi's shipment of mobile phones priced below 100 USD in Southeast Asia directly dropped by 69%.

The shipment of mobile phones priced below 200 USD in the Middle East decreased by 42%, while that of 100-USD phones in Latin America and Africa decreased by 72% and 34% respectively.

All these figures show that the supply side of low-cost mobile phones is being overwhelmed by rising costs.

The factor that breaks the balance is memory chips.

The explosive growth of demand for high-end memory from AI servers has squeezed the production capacity of DRAM and NAND for consumer mobile phones. TrendForce estimated in May that the average contract price of LPDDR4X in the second quarter increased by 70% to 75% month-on-month, and that of LPDDR5X increased by 78% to 83%. Omdia's calculation is more straightforward: in the first quarter of 2026, memory cost has accounted for nearly 60% of the total material cost of mobile phones priced below 400 USD, and exceeded 64% in products priced below 99 USD.

For a 100-yuan phone, the memory module alone takes up most of the cost. Such a phone barely has any profit margin. Once the memory price rises, manufacturers have to either raise the product price or stop production. If they raise the price, consumers will not buy; if they stop production, there will be no stock in sales channels.

Neither of the two paths works, so there is only one choice left: reduce production, or even stop producing such products entirely.

Why did mid-range phones develop so rapidly in the past few years? Because they benefited from the "flagship technology downscaling" dividend.

Flagship phones are first equipped with 1-inch main camera, ultrasonic fingerprint recognition, silicon-carbon negative electrode battery and 100-watt fast charging. After one or two years, these technologies are applied to products priced between 1500 RMB and 2500 RMB.

In essence, mid-range phones allow consumers to get the flagship experience of yesterday at the cost of today.

But this logic has a prerequisite: the supply chain must keep costs low.

Memory chips are cheap, battery technology has continuous breakthroughs, and the production capacity of display panels and fast charging modules is in surplus.

Around 2022, iQOO, OnePlus and Redmi pushed the mid-range phone market to a highly competitive level, launching products equipped with 6000mAh large batteries, tri-band GPS, ultrasonic fingerprint recognition, glass back covers and metal middle frames, which are called "mini flagships".

Flagship phones were forced to take imaging capability as their only remaining competitive advantage, and the market share was almost snatched by iQOO 12 at that time.

This prosperity is built on the supply chain dividend. When the dividend exists, mid-range phones are arbitrage products; when the dividend disappears, mid-range phones become loss-making products.

Realme withdrew from the Chinese market. iQOO Z11i is equipped with a 720P LCD water-drop screen and 6GB RAM, priced at 1299 RMB. Redmi K90 Max and the extreme edition share the same mold, with only the processor and back panel decoration changed. vivo S60 launched an additional Vitality Edition, while the price of the standard version was raised quietly.

These actions seem to show that manufacturers are becoming cunning, but they are actually stress responses after the arbitrage space disappears.

Because manufacturers are not actively cutting configurations, but passively maintaining cash flow.

Repeated Designs, Configuration Reduction and Hidden Price Hikes: Who Are Manufacturers Gaming With

Since direct price hikes will draw criticism, manufacturers choose to raise prices in alternative ways.

Therefore, Redmi K90 Max and K90 Extreme Edition share the same body mold, with basically the same screen, battery and air-cooled heat dissipation, only the processor is replaced and the back decoration is slightly adjusted. The original extreme edition is quietly downgraded, while the Max version is closer to the positioning of the previous extreme edition.

The manufacturer's goal is very simple: expand the product line downward, reduce configurations quietly, and create an illusion for consumers that "the price has not actually increased".

vivo S60 added the Vitality Edition with a starting price of 2899 RMB, while the standard version kept its original name but raised the price quietly.

The four models of the iQOO Z11i series have increasingly lower configurations.

This strategy is called confusing pricing.

By increasing SKUs, splitting configurations and reusing hardware, manufacturers make it difficult for consumers to compare prices horizontally, thus covering up the actual price increase and configuration reduction.

In the short term, manufacturers maintain their profits; in the long term, this will lead to the decline of consumer trust.

After launching derivative models with repeated designs, splitting configurations and reusing old hardware, consumers' patience has been exhausted. The popularity of new mobile phones recently is far lower than before, and few people pay attention to new products.

Consumers are not stupid. You can reduce product configurations, and they can choose not to buy.

In addition, there is another problem: manufacturers are caught in the middle and suffer losses from both sides. On the one hand, the cost of the supply chain rises abnormally; on the other hand, consumers are extremely sensitive to product prices.

Consumers cannot accept price hikes, while manufacturers cannot afford no price hikes.

The profit margin of mid-range phones is inherently smaller than that of flagship phones. Once the cost rises, mid-range phones are the first to be unable to hold on.

This prompts manufacturers to start thinking about how to "cut configurations in a more sophisticated way".

Memory is the main battlefield of skyrocketing costs, so directly cutting memory configuration is the most labor-saving choice; the price of processors rises sharply, so processor configuration can also be cut; imaging capability is not the core selling point of mid-range phones, so cutting all related configurations will not attract much attention; fast charging and large batteries have been over-competed in recent years, so it is feasible to strategically reduce related configurations.

But if all configurations are cut, the product will become as awkward as the iQOO Z11i.

After all, manufacturers still need to retain some "attractive points" to attract consumers. The problem is that manufacturers themselves do not know how to cut configurations more reasonably to make consumers more receptive.

Cunning manufacturers choose to pass the problem to consumers, that is, adopt the repeated design strategy and give the choice to consumers.

For example, Redmi added a Max version to the K90 series, vivo added a Vitality Edition to the S60 series, and iQOO launched four models in the Z11i series. The more chaotic the product line is, the more likely consumers will accept the arrangement unconsciously, and it can also create a prosperous illusion that the product line is diverse and there are more choices.

One operation seems to bring double benefits, but when consumers vote with their feet, this trick will no longer work.

Mid-range Phones Will Not Disappear

However, as I mentioned at the beginning, mid-range mobile phones will not disappear from the market, because budget constraints will always exist.

Most consumers cannot afford to buy iPhone Pro or foldable phones.

What is disappearing is the combination of "1000-yuan new phones, full specifications and independent mid-range brands".

The new mobile phone market will become dumbbell-shaped in the future.

One end is high-end AI phones, foldable phones and imaging flagships; the other end is durable feature phones, operator customized phones, official refurbished phones and nearly-new second-hand phones.

The number of new mid-range phones in the middle gear will decrease, but the mid-range demand will exist in three forms.

The first form is the new mid-range products with higher price points. The 1500-2000 RMB price range may become the new entry-level mid-range, and 2000-3500 RMB will become the mainstream mid-range. But the configuration will no longer be "full and balanced" as in the past, but with trade-offs. Large battery, waterproof performance and long software update cycle may be more important than the processor model. What consumers buy is no longer parameter indicators, but durability.

The second form is financialized mid-range products. Installment payment, contract plans, leasing and trade-in programs will split the one-time purchase cost into monthly payments. For a 2000-yuan mobile phone, paying 83 RMB per month for 24 installments greatly reduces the perceived consumption threshold. Mid-range phones are no longer just products on the hardware shelf, but are tied to financial contracts. Manufacturers and platforms make profits from financial services, ecosystem and value-added services. Mobile phones are no longer one-time transactions, but continuous paid service contracts.

The third form is stock mid-range products. Second-hand devices, refurbished devices, maintenance and battery replacement services will become inclusive channels. Using one mobile phone for three to five years makes the average annual cost lower than that of replacing a 1000-yuan phone every year. Mobile phones have changed from fast consumer electronics to durable capital goods, and the competition of mid-range phones has shifted from parameter lists to life cycle cost: purchase cost plus maintenance cost plus battery replacement cost plus second-hand residual value plus software support period.

AI is the biggest variable in this round of changes.

In the past, mid-range phones relied on the "flagship technology downscaling" logic to attract consumers, and now the core flagship technology is AI.

Moreover, AI requires larger RAM, more powerful NPU, higher memory specifications and even cloud services. These costs cannot be quickly downscaled to mid-range products like the cost of display panels or fast charging modules.

However, there is one point that under the current AI technology, mid-range AI phones may face an awkward situation: the hardware is equipped with AI-related modules, but the experience is incomplete; consumers pay for AI functions, but cannot use the full-featured AI experience.

For mid-range phones, AI is actually a real cost tax. It raises the minimum configuration threshold, making 4GB+64GB configuration completely disappear, and declaring the death of 100-yuan phones. Mid-range phones will not disappear, but they will lose the aura of "cost-effective flagship" and become "durable and sufficient-function phones".

In a sense, the retreat of mid-range phones is essentially a retreat of cash flow.

When memory prices rise, manufacturers worry that the price will continue to rise, so they purchase materials in advance and press more mobile phones to sales channels.

Counterpoint data shows that the shipment volume of manufacturers in the second quarter only decreased by 1%, but the terminal sales volume decreased by double digits year-on-year.

Shipment volume counts the number of mobile phones delivered by manufacturers to sales channels, while terminal sales volume counts the number of mobile phones actually purchased by consumers. Channel inventory supports the shipment data, but pushes the pressure to the later stage.

Transsion's revenue increased by 21.9% in the first half of the year, and the net profit attributable to shareholders increased by 46.2%, but its inventory rose from 8.9 billion RMB to 18.94 billion RMB, and the net operating cash outflow reached 5.86 billion RMB. Apple's component inventory increased from 2.12 billion USD at the end of the previous fiscal year to 7.65 billion USD. Xiaomi's mobile phone shipment in the second quarter decreased by 26.5%, and the average selling price rose by 25.9% to 1351 RMB, hitting a record high, but the mobile phone revenue still decreased by 7.5%, and the gross profit margin dropped from 11.5% to 8.5%.

Price hikes cannot fully pass on costs, and the decline in sales scale will erode profits.

Mid-range phones occupy a large amount of working capital, and face high risk of inventory depreciation. Once the terminal demand weakens, the cash flow will turn red alert.

By cutting mid-range product lines and reducing low-cost models, manufacturers are maintaining gross profit margin, cash flow and balance sheet.

Apple and Samsung can withstand the impact because they have high profits in the high-end market, sufficient inventory reserves and mature global sales channels.

Huawei can postpone price hikes because of its vertical integration and supply chain control capability. Kirin 5G chips have been re-applied to the Enjoy series, restoring the coverage of mass consumer products. Chinese domestic manufacturers rely on low-cost phones to maintain sales scale, so they are most directly affected by this round of impact.

Therefore, market contraction is inevitable, and manufacturers have made the worst plans.

It is difficult to sustain the situation of trying to control costs on the one hand and maintaining good-looking data on the other hand. Not all manufacturers are like Realme, which was supported by its parent company, and the brand that has already landed in the market can still be "released" to adjust its strategy.

For consumers, the large-scale retreat of mid-range phones is not entirely a bad thing. When the market is extremely hot, all manufacturers are forced to participate in the vicious competition, launching two or three waves of new phones every year even if the products lack clear positioning.

Now that the dividend has faded, the industry is forced to stop and re-calculate the cost. Consumers' overheated desire to buy new phones will also cool down, and their mobile phone replacement ideas will become more pragmatic.

After a period of adaptation, using one mobile phone for three to five years is also acceptable. The return to rationality does not mean recognizing all kinds of hidden configuration reduction. In this adjustment cycle, the cost of configuration trade-offs still needs to be borne by consumers at this stage.

Manufacturers can raise prices, but they need to let consumers know where their money goes: longer software update support? Better waterproof performance? Larger battery? Or higher second-hand residual value?

Mid-range mobile phones are not dead. They have just changed from "cost-effective oriented" to "cash flow oriented".

In this situation, manufacturers that can use high-end profits to subsidize mid-range products, use supply chain control to stabilize costs, and use financial channels to lower consumption thresholds can retain the mid-range market share.

The remaining manufacturers can only continue to play the increasingly unconvincing repeated design game in the increasingly narrow price range.

This article is from the WeChat official account "Dongzhen Strategy", authored by Dongzhen Strategy, and published by 36Kr with authorization.