In Depth: Memory Shortage Creates Space for China’s Lesser-Known Chipmakers

In late October, Xiaomi’s founder Lei Jun publicly lamented the sharp rise in memory chip prices, spotlighting a severe cost pressure affecting all of China’s consumer electronics sector. The issue became prominent as Xiaomi launched its Redmi K90 smartphone at a price up to 400 yuan (about $56.81) higher than its predecessor with the same configuration. Other leading Chinese brands like Oppo and Vivo also introduced new phones at higher price points, amid expectations that smartphone costs will continue to rise through 2026. The root of these increases lies in the surging global demand for memory and other components due to a boom in artificial-intelligence (AI) data centers, especially in North America, leading to elevated material costs across personal electronics industries worldwide. [para. 1][para. 2][para. 3]

This price escalation marks the arrival of an unexpected “supercycle” in the memory chip sector. Since early 2025, memory prices have jumped 50%, with Counterpoint Research forecasting a further 20% rise in the fourth quarter and potentially another 20% in early 2026; certain memory types have already doubled in price. TrendForce estimates NAND flash prices will climb 20%-25% in Q4 2025. Historically, memory price spikes were tied to events like technology upgrades or supply disruptions, but this rally originated from deliberate production cuts by top suppliers after overexpansion, rebounded in 2025’s second quarter, and was then accelerated by aggressive AI data center demand and fears of DDR4 discontinuation as North American centers rushed to secure supplies. [para. 5][para. 6][para. 7][para. 8][para. 9]

The global memory market is highly concentrated, with Samsung, SK Hynix, and Micron controlling over 90% of DRAM production and nearly similar dominance in NAND flash by a slightly broader group. This oligopoly enables coordinated output control, driving up prices as focus shifts to next-generation DDR5 and high-bandwidth memory (HBM) necessary for AI servers, reducing supply for older technologies. By Q3 2025, multiple signals suggested industry-wide inventory hoarding and long-term supply contracts extending through 2027, and even to 2028, as capacity was clearly outstripped by AI-driven demand. [para. 7][para. 10][para. 11][para. 12]

AI server infrastructure is driving unprecedented memory demand: each AI server can use 2 terabytes of RAM, dramatically outstripping consumer devices. TrendForce predicts servers will consume 66% of all DRAM by 2026, up from 46% in 2024, and more than 70% by 2027. NAND flash use by servers is set to surpass smartphones for the first time in 2026. This emerging demand lacks historical precedent, making supply and price forecasts highly uncertain. Memory manufacturing’s capital intensity and long lead times (minimum 18 months for new production) mean that despite announced investments by Samsung (about $305 billion over five years) and SK Hynix, substantial new supply won’t come online until 2027 or 2028. [para. 13][para. 14][para. 15][para. 16][para. 17][para. 18][para. 19]

As memory costs soar, consumer electronics brands face tough choices: pass on higher prices or absorb costs and compress margins. Xiaomi has trimmed shipment targets but locked down supply agreements for 2026. PCs face similar pressure, with TrendForce now projecting a 3% shipment decline in 2026 instead of previous growth, also influenced by China’s subsidy policy and memory costs. Despite demand, no severe memory shortage is expected in smartphones due to their consistent high-volume consumption. [para. 21][para. 22][para. 23][para. 24][para. 25]

This supply crunch creates a window of opportunity for Chinese memory makers, who are now finding growth by serving smaller, underserved customers. Yangtze Memory Technologies claims about 12% of the global NAND market for 2025, while ChangXin Memory is estimated to reach 4.5% of DRAM share. ChangXin, founded in 2016, is China’s lone DRAM mass producer and recently developed the country’s first DDR5 chips, narrowing the technology gap with global leaders. However, constraints on tools and process yield higher costs. Meanwhile, Yangtze Memory, hit by U.S. sanctions, has struggled to expand despite advanced tech. These restrictions have hampered progress, keeping Chinese firms from closing the gap completely with global giants. [para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35][para. 36]