Beijing: Xiaomi, China's leading smartphone manufacturer, has announced that surging memory chip prices have significantly increased the cost of producing its devices, leading to higher retail prices for consumers. This surge in component costs has impacted the pricing strategy of Xiaomi's newly launched Redmi K90 series.
In a statement on Weibo, Xiaomi's President Lu Weibing acknowledged the market's disappointment over the pricing of the new series, attributing it to unexpectedly high memory chip costs. He noted that the rising costs are "far beyond expectations" and could intensify further. The global demand for chips, driven by artificial intelligence applications, has tightened the supply of conventional chips used in smartphones, personal computers, and servers, sharply increasing their cost and boosting earnings for makers of NAND and DRAM such as South Korean companies Samsung Electronics and SK Hynix.
The base model of the Redmi K90, featuring 12 GB RAM and 256 GB storage, was launched at 2,599 yuan ($364), slightly higher than the previous K80 model's launch price. To address consumer concerns, Xiaomi decided to cut the price of the high-demand K90 variant with 12 GB RAM and 512 GB storage by 300 yuan for the first month of sales, bringing it to 2,899 yuan.
This development underscores the growing impact of AI-related chip demand on broader tech product pricing, affecting both manufacturers and consumers alike. The increased cost of memory chips poses challenges for smartphone makers, potentially leading to higher retail prices and impacting consumer purchasing decisions.
Xiaomi's experience highlights the complexities of the global semiconductor market and its direct influence on consumer electronics pricing. As the demand for AI applications continues to rise, the pressure on memory chip supply and pricing is expected to persist, potentially reshaping the landscape of the smartphone industry.