AI Memory Demand Squeezes Sub-$100 Smartphone Supply as Xiaomi Mix Shifts Upmarket

The low-priced smartphone market is contracting. Global shipments of smartphones priced below $100 totaled about 173 million units in 2025. In the second quarter of 2026, shipments in that price band fell nearly 60% year on year. In the first half of 2025, devices priced below $100 accounted for 27.7% of Xiaomi's global shipments; by the first half of 2026, that share had fallen to 11.2%.

Rising demand for memory from artificial intelligence infrastructure has led chipmakers to prioritize high-value products for AI infrastructure, squeezing the supply of memory used in smartphones and driving up costs. Memory now accounts for nearly 60% of the bill of materials for smartphones priced below $200. As costs rise, Chinese manufacturers are shifting toward the higher-end market and cutting low-priced models from their product lines, pushing overall market prices upward.

Since 2023, Xiaomi's average selling price has risen about 30% to $197, while OPPO's average selling price has risen by a similar margin to $300. Over the same period, the share of Xiaomi's shipments accounted for by models priced below $200 fell to 52.5% from 60%. In mainland China, less than 20% of Xiaomi's shipments are priced below $200. Chinese vendors generate internet service and application revenue in mainland China, which can offset some pricing pressure.

In September 2026, Xiaomi launched the higher-end Xiaomi 18 Fold, with a starting price of RMB 10,999 (about $1,640), positioning it in the premium market. Xiaomi did not immediately respond to a request for comment made outside normal working hours.