sandalwood

Summary

The latest memory cost surge stems from accelerated upstream AI infrastructure investment spilling over to end devices. On the demand side, high RAM and large storage have become essential: 12GB RAM adoption jumped from 29% in 2024 to 53% in 2025—completing an irreversible configuration shift before prices rose. On the supply side, capacity is increasingly diverted to AI servers, steadily lifting consumer-grade BoM costs.

Brands are responding not with blunt price hikes, but through modest increases combined with tiered product restructuring to absorb costs structurally. Yet there’s no universal playbook: premium brands, scale-driven value players, and channel-led OEMs face distinct capability boundaries, leading to fundamentally different strategies. Missteps will directly hit both market share and margins.

In the short term, rising costs squeeze profitability. Over the medium to long term, they also raise the hardware baseline for on-device AI. The key question now is whether brands can turn this cost pressure into a competitive edge in on-device AI experiences and use cases—this will define their next-phase positioning.

Smartphone makers are now facing their toughest configuration and pricing decisions in years.

As generative AI and high-load applications become mainstream, high RAM and large storage have shifted from optional upgrades to irreversible baseline requirements. Meanwhile, memory chip capacity is being redirected toward high-margin segments like AI servers, tightening supply for consumer-grade storage and driving up costs—steadily increasing its share in smartphone BoMs.

Compared to overseas markets, brand and channel loyalty in China is stronger, making it far harder to recover lost market share once it slips. Even as some brands have lowered full-year shipment forecasts, competition for share remains intense. Xiaomi’s recent RMB 1 billion storage subsidy is a clear signal of this aggressive stance.

With rigid demand and constrained supply converging, manufacturers’ choices on storage configuration and pricing are becoming a decisive factor in overall device competitiveness.

Mainstream Storage Configuration Shift Complete — Demand Now Firmly Entrenched

Amid overall price stability, users have already completed a structural upgrade in configuration choices. According to Sandalwood’s China e-commerce data, the sales share of 12GB RAM configurations rose from 29% in 2024 to 53% in 2025, officially overtaking 8GB as the new mainstream.

Concurrently, 8GB RAM share has fallen from over 30% to around 20%, as low-memory, small-storage models accelerate their exit from the market. Meanwhile, 16GB RAM remains stable at approximately 13%, reflecting sustained demand from power users for higher-end specs.

By price segment:

• ¥0–2,000:
• 12GB RAM has become dominant, with combined share rising from 29% to 43%.
• 8GB RAM continues to decline, dropping from 48% to 39%.
• ¥2,000–4,000:
• 12GB RAM dominates with a combined share of 68%.
• The 12GB+512GB combo saw the sharpest growth—jumping from 8% to 27%.
• 8GB RAM has nearly disappeared from this segment.
• Above ¥4,000:
• High-storage configurations are rapidly gaining traction; combined 12GB + 16GB RAM share surged from 30% to 72% over the past two quarters.
• Low-memory, small-storage options continue to fade.

Rising Costs Haven’t Triggered Sharp Price Hikes — Tiered SKUs Act as a Buffer

Looking at the alignment between pricing and configuration strategies of Q4 2025 new launches, brands have established clear segmentation across price tiers:

• Mid-to-low tier:
  Models like the Redmi K90 and Honor 500 introduced 16GB+512GB, even 16GB+1TB configurations, with only modest price increases of around ¥200.
• Mid-to-high tier:
  Flagships such as the vivo X300, OPPO Find X9, iQOO 15, and OnePlus 15 widely added 16GB+1TB options. Through ¥200–400 price adjustments, these high-spec variants were positioned as the new volume drivers.
• Premium tier:
  Devices like the Xiaomi 17 Ultra, vivo X300 Pro, and Huawei Mate 80 retained their existing configuration structures but shifted the entire lineup into higher price bands. Meanwhile, the OPPO Find X9 Pro and Huawei Mate 80 Pro pushed the ceiling further—introducing 16GB+1TB and raising prices by ¥300 to directly absorb rising memory costs.

Overall, storage cost increases have not been passed through as simple price hikes. Instead, they are being absorbed through strategic, tiered adjustments in both pricing and product configurations.

No One-Size-Fits-All Solution to Memory Price Hikes — Brands Must Operate Within Their Capability Boundaries

Under rising memory costs, there is no universal solution—brands must pursue the optimal strategy within their own capability boundaries:

• Premium brands
  With stronger pricing power, they favor a price-pass-through strategy: raising base prices and trimming low-end SKUs to directly embed cost increases into retail pricing. This preserves gross margins and portfolio stability—but risks volume elasticity and user-base contraction.
• Scale-driven, value-focused brands
  Bound by rigid price anchors, they rely on a tiered-value strategy: reshaping configuration ladders to boost the perceived value of high-storage models, steering demand toward upgraded specs instead of explicit price hikes—and using scale to dilute risk.
• Channel-dominant brands
  Constrained by channel margin expectations and price stability, they adopt a structural-substitution + pacing strategy: offsetting part of the cost pressure through trade-offs in non-memory components (e.g., materials or secondary features), while spreading the impact across multiple product cycles by moderating upgrade timing.

Mastering the on-device AI cycle will determine a brand’s competitive standing in the next phase.

From an industry-cycle perspective, the current memory price rise stems from accelerated upstream AI infrastructure and compute investment, now spilling over to end devices—fueling AI upgrades in smartphones and PCs, and enabling new AI-native form factors like smart glasses and earbuds.

Short-term hardware margins will be squeezed, but longer term, structural demand for on-device compute and storage will rise—accelerating on-device AI adoption.

For brands, the issue isn’t cost increases per se, but whether they can seize this on-device AI window: turning pressure into better experiences and real-world AI use cases to gain a competitive edge in the next phase.