In the fourth quarter of 2025, the escalation of memory prices for Chinese smartphone original equipment manufacturers (OEMs) eclipsed those observed among their U.S. counterparts, compelling suppliers to initiate “catch-up” price revisions for U.S. clients in the first quarter of 2026.
This strategy aims to ameliorate the regional pricing discrepancies. While preliminary assessments indicate that absolute prices for Chinese clients may still be marginally lower than for U.S. clients, the prospect of further increases looms, especially in light of postponed or consolidated discussions anticipated in the second quarter of 2026.
This surge in memory pricing has far surpassed initial forecasts, significantly inflating the cost of smartphone Bills of Materials (BOM).
In light of such pressing circumstances, brands find themselves needing to elevate prices on new devices, curtail promotional activities, or expedite the phase-out of older models to sustain operational integrity and cash flow.
Key Highlights
- Market Dynamics: In 4Q25, the contract prices for mobile DRAM and NAND Flash demonstrated a clear trend of being “higher in China and lower in the U.S.”
As of 1Q26, suppliers are implementing “catch-up” price adjustments for U.S. clients to mitigate the existing price gap and uphold the overall upward trajectory of pricing. - Mobile DRAM Pricing: Preliminary evaluations indicate that Chinese clients might experience slightly lower absolute pricing compared to their U.S. counterparts.
Nevertheless, additional price hikes remain a possibility, particularly if negotiations are delayed or amalgamated with discussions set for 2Q26. - Cost Implications: The surge in memory prices witnessed in 1Q26 has considerably exceeded expectations, leading to a rapid escalation in BOM costs. This situation necessitates that brands urgently adjust their pricing and product strategies to alleviate the adverse effects on profitability.
- Apple’s Tactical Adjustments: Despite possessing strong brand equity and the ability to command pricing premiums, Apple is confronted with the necessity to refine its pricing strategies.
Forecasts suggest that Apple may minimize or forgo reductions on older model prices while reassessing new product pricing, potentially resulting in elevated starting prices to counterbalance cost pressures. - Android Market Pressures: For mid- to low-end Android models, memory expenditures are anticipated to constitute over 40% of total costs in 1Q26.
This reality compels brands to increase prices on new models, heighten prices or lessen promotions for older models, and accelerate the End-of-Life (EOL) cycle of older devices.
Consequently, resources will be strategically allocated towards mid- to high-end products that command higher Average Selling Prices (ASP) to ensure sustained profitability and cash flow.
Table of Contents
- Key Points
- Updates on the Smartphone Market
- 1Q26 DRAM and NAND Flash Contract Prices for Android Smartphone Brands
- Price Trends of Smartphones from U.S. Brands
Source link: Trendforce.com.
