Xiaomi CEO Lei Jun discusses the sharp rise in memory chip prices driven by AI demand, impacting smartphone production costs and consumer electronics market.
© A. Krivonosov
Xiaomi CEO Lei Jun has commented on the sharp rise in memory chip prices, which is increasingly impacting the consumer electronics market. He stated that the rapid development of artificial intelligence technology has significantly increased demand for memory, leading to supply shortages and price spikes.
Last year, demand for memory components surged while supply couldn't keep pace with market needs. As a result, memory costs have increased noticeably, affecting the production costs of smartphones and other devices.
Lei Jun acknowledged that the situation remains challenging for manufacturers. However, the company intends to find ways to reduce the burden on customers and not pass all cost increases directly to consumers. Xiaomi is exploring various cost optimization and pricing strategies.
The rising cost of components has already affected many brands. Some manufacturers have reported reduced margins, while others are revising plans for new models or cutting production volumes. The budget device segment may be particularly vulnerable, as rising production costs make these products less profitable.
Xiaomi President Lu Weibing previously noted that the company is in a relatively stable position thanks to partnerships with the world's largest memory suppliers and a broad product portfolio ranging from smartphones and tablets to televisions and electric vehicles.
In his assessment, the current price increase cycle may last longer than previous ones, potentially continuing until the end of 2027. Industry experts suggest that in the coming months, some brands may still raise prices, while some entry-level models could disappear from the market due to reduced profitability.