Memory costs ‘beyond imagination’ may imperil smartphone makers, Xiaomi leader warns
Firms are being drawn into a price-raising cycle that could reshape the industry, executive says as company reports 27 per cent profit drop
Memory prices were surging at a magnitude “beyond imagination”, drawing smartphone makers into a long-term price-raising cycle, Lu said on an earnings call on Tuesday.
“When the price-raising cycle ends, some players may suffer significant losses or even face closure,” he said, without elaborating. However, the challenge would also force the industry to make innovations, he added.
Xiaomi reported that fourth-quarter net profit dropped 27 per cent from a year earlier to 6.5 billion yuan (US$943 million), the lowest quarterly number in a year and the first year-on-year decline since the second quarter of 2024. Fourth-quarter revenue rose 7.3 per cent from a year earlier and 3 per cent from previous quarter to 116.9 billion yuan.
The results met analyst estimates of 5.78 billion yuan in profit and 116 billion yuan in sales.
Xiaomi felt the squeeze from the rising memory costs, as smartphone shipments in the fourth quarter dropped 11.6 per cent year on year to 37.7 million units, dragging revenue for the firm’s largest revenue contributor down 13.6 per cent to 44.3 billion yuan.
The average smartphone selling price sank 2.2 per cent to 1,176 yuan from 1,202 yuan a year ago despite the firm’s shift to premium models and the higher memory costs.