Jordan Daily - Xiaomi is considering how to absorb rising memory chip costs without fully passing them on to consumers, its CEO Lei Jun has said, as the broader electronics industry grapples with increasing component prices.
The surge in demand for memory chips, fueled by advancements in artificial intelligence, has led to supply shortages and significant price increases, Lei Jun explained. This situation is creating pressure on Xiaomi's smartphone business and other product lines reliant on memory.
While aiming to minimize the impact on users, Xiaomi may explore various solutions to avoid directly transferring the full cost increase to consumers, Lei Jun added, emphasizing the importance of maintaining competitive pricing.
The repercussions of rising component prices extend beyond Xiaomi, with numerous consumer electronics companies feeling the strain. Some have reported declining profits due to increased production costs, while others have postponed or re-evaluated new product launch plans.
Xiaomi's President Lu Weibing stated that the company's position remains relatively stable compared to some competitors, owing to its close relationships with major memory chip manufacturers. He added that the company’s diverse product range, including smartphones, tablets, televisions, and electric vehicles, provides greater resilience in maintaining stable supply chains.
Lu Weibing suggested that the current cycle of rising memory prices could be longer than previous cycles, potentially lasting until the end of 2027.
Industry observers suggest some phone manufacturers may be compelled to increase device prices in the coming months. Simultaneously, lower-cost phones might gradually disappear as companies shift towards producing higher-value devices to offset rising costs.
