The "super business cycle" in the memory chip industry is continuing with a force that surpasses market expectations and is rapidly spreading across the entire consumer electronics industry chain. Xiaomi Group President Lu Weibing pointed out during a performance call on Tuesday that the speed and magnitude of the memory price increase has exceeded even the most aggressive predictions, with its impact spreading from the smartphone industry to the entire consumer electronics field. According to supply chain data compiled by Bloomberg, contract prices for DRAM and NAND flash memory continued to rise in the first quarter of 2026, forcing downstream manufacturers to adjust pricing strategies to pass on cost pressures.
Industry Impact
As the cost of raw materials soars, the personal computer (PC) market has not been spared. ASUS issued a warning on Wednesday, stating that the combined impact of rising memory and hard drive prices, along with a shortage of CPUs, is expected to lead to a 25% to 30% increase in PC prices in Taiwan and globally in the second quarter of this year. ASUS executives suggest that consumers with a need to upgrade should act quickly, given that the price increase trend might continue into the second half of the year. Fitch Ratings' Asia-Pacific Corporate Ratings Director Zhang Huiyuan further confirmed that memory chip prices will remain strong between 2026 and 2027, and despite the gradual increase in production capacity, it is unlikely to fully offset the strong market demand in the short term.
Investment Outlook
In the capital markets, the profit margins of memory chip manufacturers have significantly expanded due to price increases, while downstream assemblers and brand manufacturers face the risk of shrinking profit margins. Leading smartphone manufacturers such as Xiaomi, OPPO, and vivo have announced price adjustments, reflecting the terminal market's high sensitivity to fluctuations in core components. Investors are closely monitoring how major manufacturers will disclose changes in gross margins in their upcoming first-quarter reports, as well as consumer demand elasticity amid high inflation. As the semiconductor cycle enters deep waters, the focus of profit distribution in the industry chain is shifting significantly towards upstream suppliers with higher levels of vertical integration.
