I memory prices are becoming a serious problem and Xiaomi finds itself in the midst of a cost wave that is growing faster than expected. DRAM supplies are dwindling, aided by the hunger for AI chips, and the consequences will be felt on price lists in the coming months. Meanwhile, the company is preparing an even more decisive shift toward the high-end segment, where the impact of price increases is less severe.
Xiaomi raises smartphone prices and pushes premium models
The theme is simple only in appearance: the DRAM is becoming more and more expensive And Xiaomi can't ignore it. The quarter ended with growing profitability, but behind these numbers lies a memory price cycle that shows no signs of slowing down.
La the main cause comes from HBM itself, the high-bandwidth memory that powers AI, is sucking up production capacity from traditional DRAM lines. If factories produce more for AI, there's inevitably less room for smartphones.
Xiaomi bigwig Lu Weibing described a situation where demand is outpacing supply, and future scenarios don't seem destined to change anytime soon. Memory demands come from all sides: smartphones, notebooks, tablets, and now even from HBM. The result? A cost pressure that will push prices up for several quarters.
According to him, the difference between the various supply prices will tend to narrow, while costs will continue to rise. This means that the gross margin of Xiaomi products (whether smartphones, tablets, or notebooks) will begin to suffer significantly. And, judging by his words, thethe effect will be more evident already in 2025.
Faced with such a scenario, Xiaomi openly plans to increase its prices to the publicWeibing put it bluntly: when the cost of components rises, the company must adjust its products and adjust their price lists. The problem is that the increase in costs exceeds the increase they can afford to apply to final prices.
Precisely for this reason the company will continue to focus decisively on the high-end segmentIt's not just a choice dictated by market taste: in premium models, memory accounts for less of the device's total cost. This allows Xiaomi to better defend its numbers and at least partially avoid the impact of price increases.
And you, are you ready to pay more, even if it will be for a decidedly premium device?
