A sudden rise in the price of memory chips is slowing down the recovery of smartphones around the world. As a result, some of China’s biggest manufacturers have had to cut back on their plans to make more phones in 2026. Jiemian News has a new report that says big companies like Xiaomi and OPPO have cut their annual orders for devices by more than 20% because their profit margins are getting smaller.
The contraction means that the time of ultra-affordable hardware is coming to an end. The industry is getting ready for what analysts are calling a “unprecedented” shortage of parts.
The budget sector is taking the hit.
The report says that the cuts in production are not evenly spread out. A lot of them are in the mid-range and budget categories, which are the ones that sell the most in places like India and Southeast Asia.
Reports say that Xiaomi and OPPO are cutting their planned volume by a fifth, while Vivo has lowered its goals by about 15%. Transsion, the biggest company in African markets, is cutting back by almost 70 million units. These businesses have very small profit margins, which makes them especially vulnerable when the price of an important part, like storage, goes up.
The hoarding problem
These companies are buying more chips even though they plan to make fewer phones. The report shows that brands are rushing to get their hands on memory components now to protect themselves against price increases later this year.
This “panic buying” shows that the industry thinks the supply problem will get worse. Manufacturers are choosing to keep expensive stock instead of risking production lines stopping in the third or fourth quarter because they don’t have enough parts.
Huawei strikes back
Huawei seems to be sensing an opportunity as its competitors back off. The company is said to be getting ready to lower prices on its Pura and Nova series. This is possible because it has a domestic supply chain that protects it from price changes around the world.
This aggressive counter-move is meant to take market share away from competitors like Xiaomi and Honor, who are sticking to their goals but having to spend more money to do so. Meanwhile, the big companies Apple and Samsung are mostly safe because they are so big and have long-term supply contracts.
Effects on the Market and the Situation
This divide is a big change in the way businesses compete with each other. For years, Chinese OEMs gained market share by selling top-of-the-line features at very low prices. That model is now falling apart because the parts cost too much.
Ryan Reith, an analyst at IDC, said that even if fewer phones are sold in 2026, the average price will still go up. This year, consumers should expect fewer discounts and “flagship killer” devices because brands are passing on the higher costs of materials directly to the buyer.
What’s next
The worst pain is expected to happen in the second quarter of 2026. TrendForce has already lowered its global production forecast to a 7% drop, which is a big change from earlier predictions. We might have to cut holiday production schedules even more if memory prices don’t stabilize by the middle of the year.
