BUSINESS

Chart of the Day: Rising Memory Costs Hammer Chinese Smartphone-Makers

Published: Jun. 4, 2026 5:17 p.m. GMT+8

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Chinese smartphone-makers are struggling to navigate a sharp rise in production costs, as a tightening supply of memory chips and higher energy and logistics expenses linked to the U.S.-Iran war add pressure across the industry.

The impact has been especially severe for manufacturers focused on the lower-end segment, where already thin margins leave little room to absorb higher costs or pass them on to consumers.

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Explore the story in 30 seconds

Chinese smartphone makers face rising costs from memory chip shortages due to AI infrastructure expansion and U.S.-Iran war effects.
Xiaomi’s Q1 2026 shipments fell 19% year-on-year; Transsion’s projected full-year decline is 32%.
Global smartphone market contracted 3.1% in Q1 2026, first decline in nine quarters, with full-year forecast down 13.9% to 1.08 billion units.

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Who’s Who

Xiaomi Corp.: Xiaomi Corp.'s smartphone shipments fell 19% year-on-year in Q1 2026, the steepest decline among top five vendors. Full-year shipments are expected to drop 28%. Revenue declined 10.9%, adjusted net profit plunged 43.1%. President Lu Weibing noted memory prices rose fivefold. Xiaomi is overhauling its lineup by accelerating high-end launches and exploring AI-enabled smartphones.

Huawei Technologies Co. Ltd.: According to the article, Huawei Technologies Co. Ltd. was among the few smartphone brands to record growth in Q1 2026, with shipments increasing only 1%. The company prioritized market-share gains in the low- to mid-tier segment by holding prices steady, despite rising production costs from memory chip shortages and higher energy/logistics expenses.

Shenzhen Transsion Holdings Co. Ltd.: Shenzhen Transsion Holdings Co. Ltd. (688036.SH), a Chinese smartphone-maker focused on the sub-$150 market, has been severely impacted by rising production costs. Its shipments are projected to decline 32% in 2026, reflecting the pressure on brands reliant on budget-conscious consumers amid tightening memory chip supply and higher expenses.

Apple Inc.: According to the article, Apple Inc. benefited from integrated supply chains and premiumization strategies amid rising smartphone production costs. Apple posted record first-quarter revenue, driven by strong demand for the iPhone 17, outperforming weaker Chinese competitors in the premium segment.

Samsung Electronics Co. Ltd.: Samsung Electronics Co. Ltd. is benefiting from integrated supply chains and established premiumization strategies. Its smartphone shipments remained broadly flat in Q1 2026, with an expected decline of just 4% for the year—significantly outperforming the broader global market downturn.

AI generated, for reference only