As the surge in memory demand driven by artificial intelligence (AI) data centers pushes up DRAM prices, the results of PC and mobile manufacturers are diverging. They are taking the same expense hit, but margins now depend on how each responds. Lenovo, the world's largest PC company, has had some success protecting profitability by increasing the share of premium products. Smartphone companies such as Apple and Samsung Electronics are partly offsetting the shock with long-term contracts and cash strength. In contrast, China's Xiaomi secured volume but failed to defend profitability.
According to the industry on the 19th, memory semiconductors account for as much as 35% to nearly 40% of the cost of goods sold in major PC makers' products. That share, which was around 15% to 18% last year, has nearly doubled in a year. The three memory makers—Samsung Electronics, SK hynix and Micron—have shifted their commodity DRAM lines toward high-margin products such as HBM (high-bandwidth memory), which appears to have relatively reduced supply of general-purpose memory for PCs and mobile devices.
◇ Corporations divided by memory price hikes
HP took the hardest direct hit. HP lowered its next-quarter earnings per share (EPS) guidance below market expectations, and its share price fell to a 52-week low on the day of the earnings release. Lenovo, on the other hand, shifted its product mix toward premium offerings over the same period and lifted its PC division operating margin into the 20% range. Rather than passing the memory expense burden straight to prices, it chose to offset the shock by increasing the share of higher-margin premium lineups.
Apple and Samsung Electronics are structurally offsetting price pressures by securing 12 to 24 months' worth of memory in advance based on long-term supply contracts and cash mobilization capacity. Still, Apple is reportedly considering lowering specifications for budget models and delaying some new product launches. Samsung Electronics keeps its smartphone and memory businesses under one roof, putting it in a more favorable position than other corporations when it comes to allocating volume.
But their results told a different story. In its Apr. earnings release, Apple said iPhone sales were close to $57 billion, the highest ever for a quarter. That was up 22% from a year earlier. Total revenue rose 17% to $111.2 billion, and the gross margin beat market expectations at 49.3%. Samsung Electronics' mobile division (MX) painted a different picture from Apple. First-quarter sales were 38.1 trillion won, up 30% from the previous quarter, but operating profit was 2.8 trillion won, down 34.88% from a year earlier.
Samsung Electronics keeps both smartphone and memory businesses under one roof, but internal accounts say there is no so-called "family discount" given the management principle of running business units independently. In fact, the mobile division raised the launch price of the Galaxy S26 series by about 5% for the base model and nearly 10% for the Plus model in the United States. The memory division nearly doubled the price of mobile DRAM in a year (about $70 for 12 gigabytes) and shifted to preferring short-term, quarterly contracts instead of long-term contracts, moves cited as factors that increased the burden on the mobile division.
◇ Chinese mobile corporations hit hard by cost increases
China's Xiaomi saw first-quarter smartphone revenue fall 13% year over year to 44.3 billion yuan, with shipments down 19% to 33.8 million units. The smartphone division's gross margin fell from 12.4% to 10.1%, and companywide net profit plunged 57% to 4.7 billion yuan. Even though it secured its annual 2026 memory volume in advance, it could not avoid price increases.
Xiaomi President William Lu said at the earnings release that the memory price increases will be a very long cycle, and that the company will balance scale and margin by adjusting shipments of mid- to low-end models and rebalancing its product mix. An industry official said, "Not only Xiaomi, but most Chinese smartphone corporations that competed on price are now at a disadvantage against Samsung and Apple."
Major market research firms say this structural memory supply shortage will continue at least until 2027, and price stabilization will be possible around 2028. The survival game in the PC and mobile industries over memory is likely to continue for some time.