Domestic Smartphone Prices Rise Collectively: Chip and Memory Cost Increases Cited as Main Reason

Domestic Smartphone Prices Rise Collectively: Chip and Memory Cost Increases Cited as Main ReasonSince October 2024, domestic smartphone brands have been releasing their flagship models in a concentrated manner. Brands including vivo, OPPO, Xiaomi, Honor, OnePlus, and Realme have successively launched new products, igniting fierce competition in the market towards the year's end

Domestic Smartphone Prices Rise Collectively: Chip and Memory Cost Increases Cited as Main Reason

Since October 2024, domestic smartphone brands have been releasing their flagship models in a concentrated manner. Brands including vivo, OPPO, Xiaomi, Honor, OnePlus, and Realme have successively launched new products, igniting fierce competition in the market towards the year's end. However, the rising prices of upstream components like chips and storage have brought enormous cost pressure to domestic smartphone manufacturers, leading to a collective price increase for flagship phones.

Specifically, the vivo X200 and OPPO Find X8, released on October 14th and 24th respectively, saw their starting prices increase by 300 yuan and 200 yuan compared to their predecessors. The Xiaomi 15 series, launched on October 29th, had a starting price of 4499 yuan for the 12GB+256GB version, marking a 200 yuan increase compared to the previous generation with the same storage configuration. On October 30th, Honor unveiled the Magic7 series, with a starting price of 4499 yuan for the 12GB+256GB version, representing a 100 yuan increase over the last generation. On October 31st, OnePlus 13 launched, with the 12GB+256GB version starting at 4499 yuan, which is 200 yuan more expensive than the previous OnePlus 12.

Following this round of price increases, the starting prices of flagship phones from brands like vivo, OPPO, Honor, Xiaomi, and OnePlus have crossed the 600 USD (roughly 4200 yuan) benchmark for high-end smartphones. Meanwhile, brands like Realme, which generally occupy a lower price segment, have also seen their flagship phone starting prices reach 3599 yuan. On November 4th, Realme GT7 Pro was released, with a 12GB+256GB version priced at 3699 yuan, and a first-day sale price of 3599 yuan. This represents a 300 yuan increase compared to the previous GT5 Pro, which started at 3399 yuan and had a first-day price of 3298 yuan.

In fact, the price increases are not just limited to the starting versions. The 16GB+512GB and 16GB+1TB versions from brands like vivo, OPPO, Xiaomi, and Realme have generally seen price increases of 300 to 500 yuan.

Regarding the reasons behind this flagship phone price increase, Wang Teng, Deputy General Manager of Xiaomi's China Market Department and General Manager of the Redmi brand, explained on Weibo: Firstly, flagship processors are now upgraded to the latest 3nm process, which significantly increases manufacturing costs. Secondly, memory prices have been steadily increasing for a year and have now reached their peak, hence the larger price increase for higher memory configurations.

Data released by Counterpoint Research, a global smartphone market research firm, supports this view. Counterpoint Research stated that the average selling price (ASP) of smartphones worldwide reached 365 USD (approximately 2620 yuan) in 2024, representing a year-on-year increase of 3%. Counterpoint Research also pointed out that in the first half of 2024, sales of smartphones priced over 1000 USD saw a staggering 18% year-on-year surge. Consumer demand for high-end devices has pushed major smartphone manufacturers to accelerate their integration of generative AI technology and expand AI capabilities.

At the same time, the rising ASP of smartphones is closely related to increasing bill of materials (BoM) costs, with rising smartphone chip (SoC) prices being the primary factor. The Xiaomi 15 series, for example, is powered by the Qualcomm Snapdragon 8 Gen 2 for Galaxy processor featuring a 3nm process, and its price is 70 USD higher than the previous generation.

Counterpoint data revealed that the global average ASP for smartphones in Q3 2024 reached 349 USD (currently around 2498 yuan), marking a historical high for the third quarter. The average selling prices for the five major manufacturers are: Apple 909 USD (approximately 6506 yuan); Samsung 295 USD (approximately 2111 yuan); OPPO 246 USD (approximately 1761 yuan); vivo 214 USD (approximately 1532 yuan); and Xiaomi 148 USD (approximately 1059 yuan).

As manufacturers adopt advanced processes like 4nm and 3nm, wafer fabrication costs are expected to rise starting in 2025, impacting the pricing of products from companies like Qualcomm and MediaTek. Additionally, the rising price of memory has also significantly affected overall costs. In the third quarter of 2023, memory chip prices ended their downward trend and entered a new round of increases, with the average spot prices for DRAM and NAND exceeding 60%.

Overall, the rising prices of upstream components like chips and memory are the primary reason behind the collective price increase in domestic smartphones. As technology progresses, research and development and production costs for flagship phones continue to rise, suggesting that flagship phone prices are likely to continue their upward trend in the future.