The smartphone industry is experiencing a wave of resignations. Where are all the people leaving going?

Article | New Knowledge Research Institute

Phone prices have gone up, and industry insiders can no longer stay.

The surge in storage chip capacity caused by the AI boom has led to an over 80% increase in storage prices, triggering a collective price hike across the entire mobile phone and hardware industry.

On March 16, vivo issued an announcement confirming this month-long “price increase” trend. Starting March 18, some models of vivo and iQOO will officially adjust their prices.

This is already the second leading brand and its sub-brand to announce a price increase this month.

Prior to that, OPPO and OnePlus announced on March 10 that their prices would be adjusted starting March 16, with the common reason being the rising upstream storage costs.

In fact, earlier, there were already undercurrents in offline channels. Industry insiders revealed that vivo’s high-end phones increased by 500 yuan, Honor’s new foldable screen jumped by 1,000 yuan, and even Redmi, known for its cost-performance ratio, silently raised prices on some models by 100 yuan.

By 2026, the mobile phone market has long lost its gentle “price war” of low prices. More concerning than phone price hikes is that many people involved in making phones are leaving the industry—executives changing jobs, R&D teams departing. From automobiles to robots, from AI to smart home devices, talent in the phone industry is rushing into various “trendy” sectors.

Why has a price increase triggered by storage chips become the “spark” for talent loss in the mobile phone industry? And which brands are suffering?

Phones Become “Huangpu Military Academy,” Graduates Moving to Trendier Sectors

The story doesn’t start at the phone factory but in distant AI server rooms.

Since late 2025, generative AI and large model training demands have exploded. One AI server’s demand for DRAM and NAND is about 8 times and 3 times that of a typical server, respectively.

This has fundamentally shifted the market position of storage chips—from traditional consumer electronic components to strategic infrastructure resources.

Storage giants like Samsung, SK Hynix, and Micron have unhesitatingly shifted capacity toward high-margin HBM (High Bandwidth Memory). After all, a high-end HBM chip’s profit can match dozens or hundreds of regular consumer memory chips.

HBM is directly packaged with GPUs and ASICs. As GPU and ASIC products iterate and demand grows rapidly, its market size is expanding quickly. According to Micron’s forecast, the HBM market could reach $100 billion by 2028, with a compound annual growth rate of up to 40% from 2025 to 2028.

Data from Yuan Shuai, co-founder of New Intelligence, shows that in Q1 2026, over 45% of global storage chip capacity is allocated to AI servers, up from only 22% in the same period in 2025. The capacity share of mobile phone storage chips has fallen from 38% to 24%.

This “displacement effect” has directly led to the delivery cycle of mobile phone storage chips extending from an average of 2 weeks to 8 weeks. Some manufacturers have even experienced supply disruptions. Under demand exceeding supply, prices have begun to spiral out of control.

IDC data shows that the cost proportion of memory semiconductors in the BOM (Bill of Materials) of smartphones has risen from 10-15% to over 20%, with mid- and low-end models approaching 30-40%. Some thousand-yuan phones are already in negative gross profit territory.

“Some batches of storage chips are even priced higher than the final product,” said Zhang Xinyuan, head of Kofang Consulting. This means that for cost-effective mid- and low-end phones, the more they sell, the more they may lose money.

When cost pressures cannot be passed on, “death” becomes the only escape.

By the end of February 2026, news of Meizu’s mobile business effectively halting and its official withdrawal in March shocked the industry. Details of Meizu’s “dissolution” have recently been pieced together by media.

This 23-year-old veteran phone manufacturer couldn’t withstand the storage price surge winter. According to “Smart Emergence,” Meizu underwent a brutal restructuring, with over 50% of employees leaving—about 400 people.

Sources say most will complete procedures within that week, receiving “N+2” compensation, bidding farewell to the once “dream machine.” This marks the end of an era. In an earlier announcement, Meizu explicitly cited the reason: “The surge in memory prices has made the commercialization of new phone products impossible.”

But more intriguing is where these people are going. Instead of simple layoffs, they are being redirected to two seemingly unrelated fields: some join Flyme’s automotive team to continue serving Geely’s automotive ecosystem, others shift toward AI software development.

The once highly sought-after “PANDAER” streetwear brand has also been spun off to be self-sustaining.

Recently, Xiaomi’s former core executive Wang Teng expressed the industry’s hardships. A veteran who has worked in the mobile industry for nearly ten years, he said on social media, “Memory prices will continue to rise in Q2. The consumer electronics industry is too tough this year, and I expect a wave of large layoffs.”

His judgment is not unfounded. Having grown from a product manager in Xiaomi’s mobile division to general manager of Redmi, he has witnessed the golden era of the mobile industry and now sees its contraction. Wang Teng left Xiaomi in September 2025 and founded a tech company focusing on sleep health products, fully leaving the mobile industry.

Many industry veterans like Wang Teng have left. Notable figures such as Honor’s Guo Rui, Huawei’s Jiang Hairong, vivo’s Song Zihui and Ge Lan (Jian Zhong), and core executives from Meizu have all chosen to exit, shifting into automotive, embodied intelligence, AI + applications, and other sectors.

The departure of executives often signals a shift in industry direction, while the loss of ordinary practitioners directly reflects the industry’s survival status.

Consumers who have spoken with employees from top phone brands report that some have gone to Tesla, some to Li Auto, and others to Salomon.

A netizen with years of experience in the phone industry said that when he first entered the field, it felt okay. He worked in phones for nearly seven years but feels that the market is just like this now.

Few of those leaving the industry seem willing to return.

Huawei and Apple Remain “Diao Yu Tai,” OPPO, Xiaomi, and Honor Raise Prices to Cope

Today’s mobile industry is already a stock battle. Switching to another manufacturer is just changing “pits.” Therefore, many employees and executives leaving the industry prefer to go into automotive, robotics, AI, and other emerging sectors.

The core reason remains that the “innovation dividend” in the mobile industry is drying up, and the “cost-performance” double-edged sword not only cuts consumers but also industry players.

On March 10, OPPO took the lead in raising prices. Notably, the main increases were in the OPPO A series, K series, and other low-end thousand-yuan models.

This is no coincidence. Xiang Ligang, chairman of the Zhongguancun Information Consumption Alliance, explained: “The lowest-end phones are the first to increase in price. The reason is very simple.” The current core driver of cost increases is the rising storage chip prices. While the procurement costs for these chips are similar across different phone tiers, low-end phones have large sales volume but extremely low profit margins, leaving little room to absorb costs.

Data best illustrates this. A report from third-party firm Countpoint shows that a $200 (about 14,000 RMB) low-end phone with typical 6GB LPDDR4X + 128GB eMMC storage will see its BOM cost increase by 25% in Q1 2026 compared to the previous quarter. Storage accounts for up to 43% of the total BOM.

What does this mean? It means that in a 1,000-yuan phone, storage alone costs about 430 yuan.

A phone dealer said, “Storage prices have risen so much that offline phones are already increasing in price. There are no more phones under 1,000 yuan on the market; prices have gone up by several hundred yuan.”

This is the harsh reality: low-end phones have no profit buffer. Every cost increase means more losses, and raising prices is the only way out. The concept of “thousand-yuan phones” is accelerating toward extinction amid this price hike.

If low-end phones are the first casualties, mid-range phones are in the most awkward “sandwich” position.

Models with wholesale prices of $400–600 (about 2,800–4,200 RMB) are expected to see storage costs rise to 20–16%, also under great pressure. But more critically, after price hikes (e.g., from 1,999 yuan to 2,500 yuan), they are likely to clash with previous-generation flagship models that have been discounted.

As price differences narrow to just a few hundred yuan, consumers will inevitably reevaluate value for money. The mid-range market faces dual pressure: competing with old flagships upward and risking unsellable inventory downward. This could trigger a vicious cycle of “price hikes—poor sales—further price increases,” severely damaging brands that rely on cost-performance.

Brands like OPPO, vivo, Xiaomi, OnePlus, and iQOO, which focus on cost-effectiveness and volume, have thin profit margins and limited bargaining power. As Xiang Ligang pointed out: “If storage chip prices rise and low-end phones don’t increase in price, there may be no profit or even losses.”

High-end models, however, are the industry’s “deep moat” survivors. Flagship phones over $800 (about 5,600 RMB) may see BOM costs increase by $100–150, with storage accounting for 23% and 18%, respectively, but their high margins and brand premiums provide ample buffer.

Huawei, Apple, and other top brands, with control over supply chains, vertical integration, and loyal customer bases, can absorb costs by cutting marketing expenses or adjusting configurations. High-end consumers are less sensitive to price; what drives their purchase is “who understands my needs better,” not “who is cheaper.”

This price hike isn’t just a short-term fluctuation but a permanent upward shift in the industry’s average price level. Even if chip prices fall in the future, manufacturers are more likely to reinvest savings into R&D or marketing rather than lowering prices.

For the industry, this might not be entirely bad, as it pushes domestic brands away from past parameter-driven “cost-performance” competition toward deeper innovation and brand strength.

Phones Are Getting More Expensive, and Hardware Value Logic Is Changing

Ultimately, this price increase trend is passed on to consumers.

For ordinary users like you and me, phones are no longer disposable “fast-moving consumer goods” renewed annually. Market research reports have long indicated that users’ upgrade cycles have extended beyond 33 months.

Now, with prices rising, this cycle will only lengthen further.

So, consumers face a dilemma: accept higher prices and buy a similar phone as last year, or delay upgrading and keep using their three-year-old “old buddy.”

If the overall market prices rise, what should consumers do? The answer may lie beyond the phone itself.

When phone prices reach a certain level, the gap in value between phones and other smart devices widens. Instead of spending ten thousand yuan on a top-tier phone, consumers might choose to spend five thousand on a decent phone and another five thousand on a robot that chats and helps with chores.

This is the underlying logic behind the industry’s collective transformation: they not only want to sell you phones but also aim to become the operating system provider for your home robot, car, and more.

Honor defines phones as the “smart hub” of robots; Xiaomi integrates robots into automotive factories; vivo’s Hu Boxian has long been involved in MR and robotics. They are trying to capture consumers losing interest in phones through new hardware forms.

Of course, this is “future talk,” depending on how well robots can be practically implemented.

Moreover, the rapid proliferation of AI technology is driving demand for high-end smartphones, with edge AI accelerating its penetration into the mobile market.

In the coming years, shipments and penetration rates of AI phones will continue to grow. According to Canalys, by 2028, AI phone penetration could reach 54%, with more than half of global smartphones equipped with edge AI.

Counterpoint predicts that by 2026, 90% of high-end phones will support edge AI functions. Mid-range models priced between $100–500, affected by rising memory prices, may adopt more cloud-based AI solutions to control costs. The increasing penetration of edge AI reflects a global trend toward high-end, structurally upgraded smartphones.

For consumers, there’s no need to worry about short-term price hikes, because truly valuable products will eventually be recognized by the market. Technological progress also allows tech products to become part of everyday life.

Those who have left the phone industry surely believe the future is bright. This will undoubtedly mark a new cycle—only the best will continue to ascend in a spiral, seizing every opportunity for growth.

The story of the mobile phone industry is far from over, but whether the future remains an intelligent carrier may have many possibilities.