How AI is "stealing" storage capacity: How smartphone makers are coping with the prolonged price hike battle?

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The impact of rising storage chip prices continues to persist.

On March 16, following OPPO and OnePlus’s price adjustments, vivo and iQOO announced official retail price changes for some products: due to the ongoing significant increase in global semiconductor and storage costs, after careful evaluation, some product suggested retail prices will be adjusted starting at 10:00 on March 18. Specific models and prices are subject to the details displayed on official channels.

Prior to this, major manufacturers like Samsung, Honor, and Xiaomi had already raised prices for their new products across various categories including smartphones, tablets, and laptops.

The deeper reason behind this round of price hikes stems from the widespread explosion of the AI industry. Since last year, storage manufacturers such as Samsung, SK Hynix, and Micron have shifted capacity toward enterprise-grade products like high-bandwidth memory (HBM), leading to a continued tight supply of DRAM (LPDDR for mobile phones) and NAND flash memory needed in consumer electronics.

In this context, manufacturers like vivo announced early price adjustment plans, providing a brief decision window for the market and consumers, seen as a relatively moderate transitional approach.

Looking further ahead, this “super cycle” of storage chips is forcing manufacturers to reevaluate their supply chain resilience, product innovation capabilities, and user insights; for consumers, “buy early, enjoy early” is no longer just a competitive advantage in experience but also a rational risk-avoidance strategy.

Price increases across all mobile phone price segments

Simply put, mobile storage mainly consists of two parts: RAM (DRAM), which determines multitasking ability and directly affects smoothness in daily use; and storage space (NAND flash), which affects how many photos, videos, and apps users can store. As a core component of smartphones, the price trend of both directly impacts the overall device cost.

Market forecasts indicate that flagship models equipped with top-tier RAM, such as the recently released vivo X300 and X300 Pro, will be affected; subsequent models like X300s and X300 Ultra are also likely to see price increases due to similar configurations. The starting price of the X300s is expected to surpass 5,000 yuan, and the top-end version of X300 Ultra may reach the 10,000 yuan mark.

In fact, the market has anticipated this. Samsung’s new Galaxy S26 series has increased in price by about 1,000 yuan compared to the previous generation; Honor’s new foldable Magic V6 with 16GB+512GB storage has risen from 9,999 yuan to 10,999 yuan, also a 1,000 yuan increase. Xiaomi and Honor executives have responded to price hikes by citing “memory prices rising too much” and “memory price increases may continue for two or three years.”

Mid-range and entry-level products are not exempt. OPPO stated: “Faced with rising costs of key smartphone components including high-speed storage hardware,” they will adjust prices for some already released models starting at 00:00 on March 16, including OPPO A series, K series, and OnePlus. According to Shell Finance reporters, the upcoming Find series will also see price increases of around 1,000 yuan.

How fierce are these storage chip price hikes? TrendForce reports that the first-quarter contract prices for conventional DRAM are revised from an estimated 55%-60% increase to 90%-95%; NAND flash contract prices are also revised from an estimated 33%-38% increase to 55%-60%.

This has led to a higher proportion of storage chips in the overall cost of smartphones. TrendForce states that previously, storage accounted for about 10%-15% of material costs in smartphones, now it has risen to 30%-40%. “Raising end-user prices seems to be an inevitable choice to maintain operations, and brands need to readjust product ratios or configurations to cope with the ongoing surge in storage costs.”

AI is “stealing” mobile phone memory

Why are storage chip prices rising so sharply and continuously? The core reason is the explosion of the AI industry, which is “taking away” the memory capacity originally allocated to smartphones.

Compared to ordinary servers, each AI server’s demand for DRAM and NAND is about 8 times and 3 times higher, respectively. As generative AI and large model training demand continue to grow, major storage manufacturers are shifting capacity toward high-margin products like HBM (high-bandwidth memory) and DDR5.

This directly compresses the supply of LPDDR memory for smartphones, with supply-demand gaps widening. Industry sources say that AI-related storage capacity has already been pre-locked by leading cloud providers, with some companies even negotiating supply contracts for 2027. The capacity quotas for consumer-grade storage are being continuously squeezed.

Short-term relief for the shortage of mobile storage is unlikely. IDC predicts that storage supply challenges will persist throughout 2026 and may extend into 2027. TrendForce further notes that building new storage factories takes at least two years from announcement to production, with the earliest effective capacity expected to be released in the second half of 2027. This means that in the next 1-2 years, smartphone manufacturers will face prolonged high fluctuations in storage costs.

However, this trend opens a critical window for domestic storage manufacturers. Against the backdrop of global storage capacity strategic adjustments, domestic storage companies are actively promoting their products in domestic smartphones, PCs, and other devices, which could help alleviate cost pressures and stabilize supply chains for domestic brands.

How can smartphone manufacturers navigate this cycle?

In the long run, although this wave of storage chip price hikes is aggressive, it also forces China’s smartphone industry to move beyond mere price competition. Manufacturers are compelled to slow down and rethink the core meaning of high-end products—focusing on solid product strength and differentiated user experience to support higher price ranges.

For example, in the imaging sector, mainstream manufacturers are deeply partnering with professional imaging brands to create long-term differentiated imaging value. This can be seen as a long-term strategy to cope with supply chain price increases: if a phone can maintain top-tier experience over three or four years, its initial price can actually highlight its long-term cost-effectiveness.

Industry trends suggest that smartphone prices may continue to rise. Previously, staff at several brand stores told Shell Finance that government subsidies are still in effect, and models under 6,000 yuan can still receive subsidies; however, after price increases, even with subsidies, the net benefit may be offset.

This also means that waiting could risk further price hikes later, making “buy early, enjoy early” a more practical risk-avoidance strategy. In this price adjustment cycle, vivo set a 2-day buffer period for original-price purchases, combined with other brands’ pre-price change windows, offering consumers a relatively rational time to buy.

For the smartphone industry, although companies face short-term cost pressures, this also acts as a filter for the industry. When price is no longer the sole competitive factor, the focus shifts to core strength: only those with resilient supply chains, advanced core technologies, and strong user experience can survive the fluctuations and stay competitive.