Xiaomi Plans Up to 25% Price Hike on Smartphones Amid Rising Component Costs
Chinese tech giant Xiaomi announced it will raise prices on its smartphones and tablets by up to 25%, with some models seeing increases of around $137. The price hike, first revealed by Xiaomi's Japan office, is expected to extend to other international markets, including Israel. This move comes as Xiaomi faces a sharp decline in mobile division profits and shrinking smartphone shipments worldwide.
The most significant price increases will affect mid-range and budget premium models, notably the Xiaomi 17T Pro and the POCO X8 Pro and Pro Max series. Historically, Chinese manufacturers absorbed market fluctuations to maintain customer loyalty, but Xiaomi stated the rising cost of memory chips has become too burdensome to sustain. Tablet prices will also rise, casting doubt on the brand's previous competitive pricing advantage.
Xiaomi's decision follows its Q2 financial report, which revealed a 42.6% drop in adjusted net profit to 6.2 billion yuan (approximately 2.8 billion shekels) and a 26% global decline in smartphone shipments. The mobile division's gross margin fell to a record low of 8.5% from 11.5% the previous year, with over half of its devices sold below $200.
In response to declining mobile profits, Xiaomi is accelerating its strategic shift toward electric vehicles (EVs) and artificial intelligence, which accounted for about 23% of its revenue last quarter. The company has sold over 104,000 SU7 EVs and recently introduced the SkyNomad SUV series as it prepares to enter the European market. Although EV investments currently generate operational losses, Xiaomi's leadership views this sector as the future growth engine replacing the saturated smartphone market.
Xiaomi President William Lu told investors the toughest period is behind the company and that memory chip price increases are slowing. Nonetheless, the price hikes confirm that consumers will ultimately bear the cost. Xiaomi's move aligns with a broader industry trend, as other major players like Apple and Samsung also face rising hardware costs, signaling the end of the era of high-performance smartphones at rock-bottom prices.
