🧠 Food for thought

Implications, context, and why it matters.

Margin pressure set the stage for Xiaomi’s price hikes

• Xiaomi raised prices after smartphone profits tightened. Its smartphone gross profit margin slid to 8.3% in the fourth quarter of 2025, down from 12% a year earlier 1.
• Shipments dropped 2% in 2025, plus the average selling price edged lower. That left less room to cover rising component costs 1.
• A company executive called the memory cost jump “beyond imagination” 2. Lu Weibing said Xiaomi “held on a little longer than others” and described increases as “inevitable” 1.

The AI boom is tightening memory supply for consumer electronics

• DRAM (dynamic random-access memory) makers are shifting capacity toward High Bandwidth Memory (HBM), a high-speed type of memory used in AI systems, plus server uses. NAND (a type of flash memory used for storage) output is moving toward enterprise SSDs (solid-state drives used in business data storage) 3.
• Large cloud service providers are locking in supply with long-term agreements, which TrendForce says keeps near-term supply tight 3.
• Even with lower PC DRAM demand forecasts, DRAM suppliers cut shipments to PC OEMs (original equipment manufacturers) and module makers. Some buyers then paid more, which supported further increases 3.
• A Xiaomi executive said a prolonged cycle could push weaker smartphone brands into heavy losses or even closure 2.