Domestic Smartphone Brands Collectively Raise Prices: The Era of Cost-Performance Ratio Comes to an End

Text | Duke Interconnect (ID: wlyxs888), Author | Niu Jinpeng

On March 16th, vivo issued a price increase announcement that immediately caused a stir in the domestic mobile phone industry.

The announcement was very straightforward: due to the continuous surge in global semiconductor and storage costs, starting March 18th, vivo and iQOO will adjust the prices of some models across the board.

Just six days earlier, OPPO had already taken action—effective March 16th, the A series, K series, and some OnePlus models all saw price hikes.

With the top two major manufacturers consecutively raising prices, offline channels have long been prepared: mid-range models increased by 300-500 yuan, and flagship foldables saw a maximum increase of up to 2,000 yuan. Meanwhile, Xiaomi Group President Lu Weibing was asked by netizens whether prices would rise; his response—“I understand my competitors, everyone is facing difficulties, and we are also feeling the pain”—exposed the industry’s awkward reality:

No manufacturer dares to confidently claim “never raising prices,” nor is anyone willing to be the “bad guy” who hikes prices. But this wave of price increases across all price segments and mainstream brands is unavoidable now.

【The cost-performance bottom line has been thoroughly stripped by storage chips】

Over the past decade, domestic smartphones have dominated the market not because of brand loyalty, but because they embedded “extreme cost-performance” into their core strategy.

The core of this strategy has never been driven by manufacturers’ “conscience” of “not making money, just making friends,” but by a decade-long supply chain deflation dividend—especially for storage chips, the key cost component of smartphones. Continuous price reductions over the years have enabled manufacturers to produce large-memory, high-performance phones at around 999 yuan, pushing the cost-performance ratio to its limit.

But starting in Q2 2025, this logic has completely collapsed.

This round of storage chip price hikes is not a short-term market fluctuation but an unprecedented prolonged upward cycle in industry history. Lu Weibing publicly predicted that this price increase would last from Q2 2025 to the end of 2027, nearly three years. According to TrendForce and Tongji Consulting data: in Q1 2026, the contract prices for DRAM mobile memory increased by 55%-95% month-over-month, NAND flash prices rose by 33%-38%, and spot prices surged over 300% in the past three months.

To put it in terms understandable to the average person: mainstream 12GB+256GB storage modules, which cost less than $30 (around 200+ RMB) at their lowest, have now soared to $120 (about 860 RMB), meaning the storage cost per device has increased by over 600 yuan; 1TB flash chips, which cost over 200 RMB in 2025, now approach 600 RMB, more than doubling.

More critically, the proportion of storage chips in the total material cost of a phone has jumped from the traditional 10%-15% to 30%-40%. For some entry-level models, storage costs even account for nearly 50%, completely breaking through the previously thin profit margins.

In simple terms, the myth of cost-performance was originally a transfer of supply chain dividends. Now that the supply chain has shifted from “price cuts and water release” to “price hikes and water extraction,” even the most extreme cost-performance is rendered meaningless. An offline distributor bluntly said that there are no new models under 1,000 yuan on the market anymore; entry-level models that used to be 999 yuan are now priced above 1,500 yuan or have downgraded configurations that even struggle with daily video streaming.

Data further illustrates the point: the market share of models below 1,000 yuan dropped from 22% in 2023 to less than 3% in Q1 2026, with only a few old models remaining in clearance. Brands that once swept the market with cost-performance are now the hardest hit—after all, a pricing strategy based on cost-plus is impossible when costs double.

【The more you raise prices, the less I want to upgrade: a vicious cycle has begun】

Counteracting the collective price hikes by manufacturers is the ongoing rationalization and even downgrade of consumer spending.

The most dangerous contradiction in this wave of price increases lies here: manufacturers want to offset costs and preserve profits through higher prices, but consumers’ wallets can no longer keep pace with product price upgrades.

Data from China Academy of Information and Communications Technology (CAICT) released in January 2026 shows that the average upgrade cycle for domestic smartphone users has extended to 40.2 months—over three years and four months—almost doubling from 25 months five years ago. Counterpoint’s report is even more severe: the global average upgrade cycle is approaching four years, with high-end users upgrading every 4.5 years.

Once, smartphones were replaced every two years as fast-moving consumer goods; now, they are more like durable goods that “don’t break, so don’t replace,” similar to refrigerators and TVs at home.

The core reasons for the longer upgrade cycle include slower hardware iteration, improved system optimization, and most importantly, changing consumer expectations. During economic downturns, people become more cautious about unnecessary large expenditures; upgrading a phone is no longer routine every year but a choice to “not upgrade if possible” or “delay upgrading as long as possible.”

And the collective price hikes by manufacturers will only deepen this wait-and-see attitude, creating a vicious cycle: price increase → consumers postpone upgrades → sales decline → manufacturers raise prices further to protect profits → consumers buy even less.

IDC’s forecast confirms this risk: in 2026, China’s total smartphone shipments are expected to be about 278 million units, a decline of 2.2% year-over-year, with market size continuing to shrink. Consumer behavior is also polarizing: some users simply give up and continue using their old phones; others choose to “go all-in,” spending more on high-end flagships to spread the cost over a longer period.

This polarization directly erodes the core mid-range market and has sparked a boom in the second-hand phone market. Data shows that in 2026, China’s second-hand smartphone market is projected to surpass 100 million units, a 20% increase year-over-year, with over 70% of low-end users delaying new phone purchases—either sticking with old devices or turning to second-hand markets.

Consumer downgrading and manufacturer price increases are creating a dangerous hedge—manufacturers want to earn more per device, but the number of users willing to spend on new phones is decreasing.

【Don’t use costs as an excuse: price hikes are a long-planned strategy】

All manufacturers attribute the price increases to “rising storage costs.” But behind this collective price hike, there’s much more than just “cost-driven pressure.”

Rather than being a passive, helpless move, it’s a calculated effort by domestic brands to leverage rising costs as an opportunity for high-end market breakthroughs.

A detail reveals the true intent: OPPO’s price adjustments cover mid-to-low-end models like the A and K series, as well as the value-oriented OnePlus brand, while high-end Find and Reno series are not included; vivo’s price adjustments cover the entire brand, but feedback from offline channels indicates the largest increases are on mid-range volume models, with flagship models seeing relatively controlled hikes.

This means that the core of their strategy is to raise the overall price floor, abandoning the previous “mid- to low-end internal competition for volume, high-end for profit” model, and shifting the entire pricing system upward.

Over the past decade, Chinese smartphones have been trapped in the “cost-performance trap”: the mid-to-low-end market relies on low prices for volume but earns little profit; the high-end market remains dominated by Apple, with consumers unwilling to pay premium prices for domestics. Before 2023, Apple’s market share in the ultra-high-end segment above 6,000 RMB was over 80%, while domestic brands could only fight in the mid-to-low end, barely making a dent.

But in recent years, domestic brands’ high-end efforts have begun to show results. Counterpoint data shows that in 2025, domestic brands’ market share in the ultra-high-end segment above 6,000 RMB reached 47%, up 29 percentage points from 2023; Apple’s share dropped from 82% to 51%, falling below 60% for the first time. The average price of domestic phones has risen from 2,685 RMB five years ago to nearly 4,000 RMB today, an increase of about 1,400 RMB.

High-endization has shifted from an “option” to a “must-answer” for domestic brands.

And this wave of storage cost increases provides a perfect stepping stone.

Previously, brands hesitated to raise prices for fear of being criticized as “ungrateful” or losing cost-performance users; now, with the “global supply chain cost increase” as an industry-wide justification, manufacturers can naturally cross previously unthinkable price thresholds, not only offsetting cost pressures but also elevating their pricing hierarchy, shedding the “low-price, low-quality” label, and moving upward.

In essence, rising costs are a natural disaster, but manufacturers may be using this as an opportunity to finally do what they’ve long wanted—abandon the vicious internal competition of the mid- to low-end market, take control of pricing, and directly compete with Apple in the high-end segment.

【Can higher prices support China’s smartphone ambitions?】

This collective price increase is not a one-time adjustment but a deep restructuring of China’s mobile industry. It marks the end of the era of extreme cost-performance and pushes domestic smartphones into a new crossroads.

Two unavoidable questions face domestic manufacturers:

First: When prices go up, can your product strength and brand power support higher pricing?

Previously, consumers were willing to pay for domestic phones mainly because of “half the price of Apple with similar specs.” Now that prices have risen, if the only selling point is hardware specs without core technological barriers, a solid system experience, or genuine brand premium, why wouldn’t users just pay more to buy Apple?

Second: With the disappearance of 1,000-yuan models and the continued contraction of the mid-to-low-end market, is the fundamental domestic market stable?

Previously, domestic phones captured over half of the global market share by covering all price segments from 999 RMB to high-end models, relying on millions of entry-level users. Now, raising the entry threshold to above 1,500 RMB may improve per-unit profits but also hands over a large base of entry-level users to second-hand markets or the revived clone market.

More harshly, the current storage chip price hike cycle is expected to last nearly two more years. That means today’s price increases might just be the beginning.

If storage chip prices continue to rise, will manufacturers keep raising prices? Will consumers’ upgrade cycles extend further to 4 or 5 years? When the existing market becomes increasingly competitive, can price hikes truly resolve the profit anxiety of domestic brands?

As we personally dismantle the myth of cost-performance that once supported us, can higher prices truly earn consumers’ willing acceptance?

Note: Some data in this article are sourced from publicly available online information.

【Author: Niu Jinpeng, (Duke Interconnect main editor), columnist, invited media commentator, new economy analyst, business and technology reviewer. Focus areas include e-commerce, O2O, corporate transformation, internet, new media, big data, AI, new energy, etc.】