[Edaily Reporter KIM JUNG YOU ] Global “chipflation” (price hikes caused by a semiconductor shortage) is spreading to the Chinese consumer market. This is because even major Chinese smartphone manufacturers, which had previously relied on “low prices” as their competitive edge, are now raising prices across the board due to rising costs of key components such as memory chips and application processors (APs). Prices have risen by up to 1,000 yuan (approximately 204,000 KRW) across the board, from mid-to-low-end models to flagship lineups.

According to reports on the 2nd by the Chinese state-run media outlet Global Times (Huanqiu Shibao) and Japan’s Zaikei Shimbun, Huawei has raised the manufacturer’s suggested retail price of its flagship “Mate 80 Pro” series by 1,000 yuan. Consequently, the 12GB (RAM)·256GB (storage) model has gone from 5,999 yuan (approximately 1,221,500 won) to 6,999 yuan (approximately 1,425,000 won), while the 16GB RAM and 1TB storage model has risen from 7,999 yuan (1,629,000 won) to 8,999 yuan (approximately 1,838,000 won). The two models of the top-of-the-line “Mate 80 Pro Max” have also seen price increases of 1,000 yuan each.

In addition, Huawei raised prices across the entire 'Mate 80' series by around 800 yuan (approximately 163,000 won). The Mate 80 series is a flagship model comparable to the “ SamsungElectronics(005930) ” “Galaxy S” series in South Korea. Considering that the Galaxy S26 (12GB/256GB model), released earlier this year, was priced at 1,254,000 won, the price gap between the two companies appears to have narrowed significantly.

Xiaomi has also joined the wave of major price hikes. The launch prices for its flagship series, the “Xiaomi 17” and “17 Pro,” were raised by 300 yuan (approximately 61,000 won) each, while the top-of-the-line “17 Pro Max” saw a price increase of 500 yuan (approximately 101,000 won). Prices for Xiaomi’s sub-brand models, the “Redmi K90” and “K90 Ultra,” rose by 400 yuan (approximately 81,000 won), while the “Redmi Turbo 5 Max” saw a 200-yuan (approximately 40,000 won) increase. Honor also raised the price of its “Power 2” model by 500 yuan, while its flagship “Magic 8” model saw price increases ranging from 300 to 500 yuan.

While Chinese smartphone manufacturers have traditionally adjusted prices to coincide with new product launches or promotional periods, industry observers view this as an unusual development, given that so many companies have implemented price hikes on such a widespread scale.

Chipflation is cited as the main reason behind these price hikes. The shortage of memory semiconductors, such as DRAM, which has persisted since early this year, combined with a surge in demand for high-performance memory driven by the rapid expansion of artificial intelligence (AI) servers and data centers, is exacerbating the burden on smartphone manufacturers in securing components. According to JPMorgan, global DRAM prices are projected to rise by more than 400% from early 2024 through the end of this year.

In fact, the price of application processors (APs)—often referred to as the “brain” of a smartphone—has risen significantly. Qualcomm, which supplies APs to companies such as Xiaomi, Honor, Oppo, and Vivo, raised the supply prices of its major chipsets by 10% starting with shipments on the 1st of this month. An AP is an ultra-high-density system-on-a-chip (SoC) that integrates multiple core semiconductor functions into a single chip. Since APs account for a consistently high proportion—roughly 15–25%—of a smartphone’s component costs, this represents a significant burden.

Ma Zhihua, an ICT industry analyst, stated in an interview with the Global Times, “This price hike is an unavoidable choice for manufacturers facing rising costs for core components such as memory and processors,” adding, “Due to the rapid growth of the AI market, semiconductor foundry production capacity has shifted toward AI servers, leading to a tight supply of semiconductors for home appliances and IT devices.”

The ripple effects of this “chipflation” are impacting the global smartphone industry as a whole. According to market research firm Counterpoint Research, global smartphone market revenue in the second quarter of this year reached $109 billion (approximately 149 trillion won), a 7% increase year-over-year. While this marks the highest second-quarter revenue on record, shipment volumes actually declined. This is because the average selling price (ASP) jumped by 17% to a record high of $400—a result of price hikes by manufacturers driven by chipflation.

Until now, Chinese smartphone manufacturers have competed with companies like Apple and SamsungElectronics on price. However, if overall prices surge due to “chipflation,” the competitiveness of Chinese smartphones will inevitably diminish compared to before. While the entire global smartphone industry will be affected by chipflation, the industry consensus is that Chinese phones—which have traditionally prioritized price—will be hit particularly hard.

A smartphone industry official stated, “Until now, Chinese companies have limited cost pressures through negotiations with component suppliers, feature adjustments, and reduced profit margins,” but added, “However, if the prices of components such as application processors (APs)—which account for a large portion of production costs—skyrocket, there will be no room left to absorb these increases, meaning Chinese smartphones will face a new competitive landscape.”