Memory shortages force Xiaomi to reduce smartphone production

Amid a global shortage, Chinese smartphone manufacturers are revising their delivery plans for 2026 due to the rising cost of memory chips. According to sources in the supply chain, Xiaomi and Transsion have been hit hardest by the changes, with tens of millions of devices affected.

The South China Morning Post reports on this.

How have Xiaomi's production plans for 2026 changed?

Xiaomi recently lowered its final shipment forecast for 2026 by 10 to 70 million units, according to recommendations for suppliers. This occurred after the company failed to reach its goal of selling 180 million smartphones in the fourth quarter of last year.

Transsion, a budget manufacturer, lowered its annual goal by 30 to 45 million units; the initial plan was around 115 million units. Sources emphasize that the final figures may change depending on the market situation, with memory costs being the main culprit.

The reduction in forecasts is occurring amid a "supercycle" in the memory sector. The three largest suppliers—Samsung Electronics, SK Hynix, and Micron Technology—are shifting their focus to AI products, creating a shortage of consumer electronics in the process. Brands are therefore updating their forecasts cautiously and frequently. According to one supply chain representative, the situation is akin to a weekly review of production plans.

Separately, sources point out that Xiaomi and Transsion's shipment numbers may differ significantly within the supply chain. Companies reportedly provide higher forecasts to memory chip manufacturers to secure better resource allocation and lower forecasts to other component suppliers, thereby strengthening their negotiating position on prices.

Meanwhile, some companies, including Huawei, may be less vulnerable due to their close ties with Chinese memory manufacturers, such as ChangXin Memory Technologies.

In December, IDC analysts lowered their forecast for the global smartphone market, predicting a sales decline of 2.9–5.2%. The company's analysis indicates that Chinese Android manufacturers focused on the lower-price segment face the greatest risks. IDC describes the industry's mood as pessimistic for the first half of 2026. The company hopes that the demand for AI memory will peak in the second half of 2026, which would ease the pressure on prices. However, confidence in such an outcome remains low.

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