Xiaomi Corporation

Tuesday: The Chinese Giant Surprises the Market

Chinese technology giant Xiaomi has made an unexpected move that has attracted the attention of the entire smartphone market. The company has raised its annual smartphone sales target from 90 million to 110 million units. This comes despite increasing pressure from high memory and other component prices, which have placed significant strain on manufacturers in recent months.

XIACY ... Xiaomi’s decision, reported by Chinese media outlet Jiemian News citing industry sources, appears bold. Earlier this year, the company lowered its target due to the negative impact of high memory prices. Management now believes that the worst is over and that the market is ready for a reversal.

According to the report, the higher sales target is based on Xiaomi’s internal assessment that the current rise in memory market prices is approaching its peak and could soon be followed by a decline. If this forecast proves accurate, Xiaomi will gain a double advantage: higher sales volumes and lower production costs.

Memory Prices: Drivers and Risks

The memory chip market is going through a highly volatile period. Demand for memory used in artificial intelligence applications has soared, absorbing a significant share of global production. Companies manufacturing memory chips for AI servers are generating exceptional profits, while smartphone manufacturers are being forced to compete with them for limited resources.

For Xiaomi and other smartphone manufacturers, this means higher component costs. Memory chips are among the most expensive and important components of a smartphone, and when their prices rise, manufacturers’ profit margins decline. Earlier this year, Xiaomi even lowered its shipment target for this very reason.

However, the company now believes that the situation is changing. According to Xiaomi’s estimates, the memory chip market is ready for a reversal. This may be related to several factors. First, memory...

Introduction: The Market Is Declining, but the Leaders Are Growing

The second quarter of 2026 was a period of sharp contrasts for China’s smartphone market. Total shipments fell by 4.3% to 66 million units. This decline was driven by rising prices for memory chips and other components, which forced many manufacturers to increase the prices of their finished products. Under these conditions, consumers became more cautious, choosing either to postpone purchases or switch to cheaper alternatives.

However, there were two bright spots in this otherwise gloomy picture. Apple and Huawei were the only manufacturers that managed to increase their shipments. Huawei’s sales rose by 20%, while Apple’s increased by 25%. Both companies maintained strong positions in the upper end of the market, while their competitors struggled with weakening demand.

In this article, we will examine the reasons behind Huawei’s and Apple’s success, assess the impact of rising component prices, and explore what may lie ahead for China’s smartphone market in the second half of 2026.

The Overall Picture: The Market Declines by 4.3%

Reasons for the Downturn

The main reason for the market decline was the rising cost of memory chips and other components. Demand from the artificial intelligence industry led to supply shortages and higher component prices. This, in turn, increased production costs, which manufacturers passed on to consumers.

Higher smartphone prices, particularly in the mid-range and budget segments, discouraged some buyers. Amid economic uncertainty, consumers became more price-sensitive and began postponing purchases.

Regional Characteristics

China’s smartphone market is the largest in the world, and its performance influences global trends. A decline in shipments in China may signal a broader slowdown in the global smartphone market.

Nevertheless, China remains a critical market for every major manufacturer, and success or failure there has a significant impact on their global positions.

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