Xiaomi Corporation (OTC:XIACF) (OTC:XIACY) has attributed the rising costs of memory chips to the increased production expenses of its smartphones.
Xiaomi Trims Redmi K90 Price Amid Chip Surge
Xiaomi’s President Lu Weibing took to Weibo on Friday to address the issue of escalating memory chip prices, which have led to an increase in the production costs of the company’s handsets. The new Redmi K90 series, in particular, has been met with market disappointment due to its pricing, Reuters reported.
The base model of the Redmi K90, which was launched on Thursday, starts at 2,599 yuan ($364) for 12 GB of memory and 256 GB of storage. This is a significant increase from the 2,499 yuan ($350) price tag of its predecessor, the K80 series, launched in November 2024.
Weibing acknowledged consumer dissatisfaction with the price differences between the various configurations and announced a temporary price reduction of 300 yuan ($42.10) for the most popular K90 model, with 12 GB of memory and 512 GB of storage, bringing its price down to 2,899 yuan ($406.79) for the first month of sales.
The surge in demand for AI-focused chips has created a shortage of traditional semiconductors used in smartphones, PCs, and servers. As supply tightens, prices for those conventional chips have risen sharply — providing a windfall for memory makers like Samsung Electronics (OTC:SSNLF) and SK Hynix.
Competition With Apple Heats Up
This development comes at a time when Xiaomi is facing renewed competition from Apple Inc. (NASDAQ:AAPL) in the Chinese market. Despite earlier challenges, Apple’s iPhone business in China has reportedly “put the worst behind it,” and the company is expected to pose a fresh challenge to Xiaomi with its 2026 iPhone lineup.
Earlier in September, Xiaomi unveiled its 17 Series in China, directly targeting Apple’s iPhone 17 lineup with bold features and competitive pricing.
In May, Xiaomi founder Lei Jun announced plans to invest at least 50 billion yuan ($6.93 billion) in chip design over a period of no less than 10 years beginning in 2021. The Apple competitor has already poured 13.5 billion yuan ($1.89 billion) into developing its advanced XringO1 mobile chip. Its chip design unit now exceeds 2,500 employees — a clear sign of Xiaomi's push toward semiconductor self-sufficiency.
Meanwhile, Apple is reportedly cutting iPhone Air production but increasing production for other flagship iPhone 17 models amid strong demand, indicating a potential shift in the Chinese smartphone market.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
