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The global smartphone industry is facing price pressure as input costs climb. According to Counterpoint Research, in Q1 this year DRAM memory chip prices rose by more than 50%, while NAND prices rose by more than 90% versus Q4 2025. As a result, the total component cost of a smartphone is estimated to have risen by more than 20% compared to the previous quarter. Rising component costs are rapidly disrupting the smartphone manufacturing sector. In particular, the budget smartphone segment with thin margins is believed to be the hardest hit. This year, smartphone makers will face a major challenge in balancing rising component costs with the goal of increasing production. For budget smartphones (under $200), with configurations of 6GB DRAM and 128GB NAND, total production cost is estimated to have risen about 25% versus Q4 2025. Memory costs alone account for up to 43% of total production costs. In the mid-range segment, for devices priced from $400–$600 with 8GB DRAM and 256GB NAND, the share of DRAM and NAND costs is 14% and 11% of production costs respectively. This share is expected to rise to 20% and 16% in Q2 this year. High-end models priced from $800 face greater cost pressures as they require high-capacity memory and a next-generation processor manufactured on a 2nm process. Counterpoint Research estimates that models in these lines with 16GB DRAM and 512GB NAND could see production costs rise by an additional $100 to $150 in Q2 this year. DRAM and NAND would account for about 23% and 18% of total costs respectively. Mr. Shanghao Bai, senior analyst at Counterpoint Research, says that price increases for smartphones in the near term are not avoidable. "Budget smartphones could rise by about $30, while high-end segments could rise by another $150 to $200," he noted. Facing this cost pressure, manufacturers are adjusting production strategies to protect margins. Counterpoint Research notes that many firms are trimming output of budget models and cutting specs on components that do not directly affect essential functions. According to Mr. Bai, this year smartphone makers will face a major challenge balancing rising component costs with the goal of increasing production. Companies pursuing market share through budget models may have to accept near-term losses.
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