It appears that the ongoing inflationary trend vis-à-vis memory chips, despite a modest reduction in spot DRAM prices recently, has reached demand destruction levels. After all, why else would MediaTek and Qualcomm slash their production of mobile chips by millions of units?
MediaTek and Qualcomm are reportedly slashing the production of mobile chips geared primarily towards mid and low-end smartphones, as the ongoing memory chipflation starts impacting demand
As we noted recently, the wider smartphone industry has been hit by a double whammy of sorts: the astronomical increase in memory chip prices over the past year, largely driven by the AI-led cornering of global DRAM capacity for high-bandwidth memory (HBM), as well as the ongoing logistics upheaval from the Iran war in the Middle East.
For instance, one relatively unforeseen outcome of the Iran war has been the global shortage of helium gas, which is used in semiconductor fabrication for cryogenic cooling and high-purity cleaning. Do note that Qatar's gigantic North Field is a major source of helium gas. However, those supplies currently remain inaccessible due to Iran's closure of the Hormuz Strait.
On the memory front, we noted recently that DDR5 spot prices have now begun declining from their recent zenith, with the popular narrative identifying Google's TurboQuant as the instigator. People fear that the algorithm - which compresses the KV cache in a lossless fashion, resulting in greater inference efficiency - would dampen the oncoming demand for memory resources just as major players start to embark on capacity expansion.
Industry analysts, however, continue to contend that a moderation in spot prices does not indicate an imminent trend reversal. In fact, Daishin Securities has discovered via its channel checks that a major cloud service provider (CSP) purchased server DDR4 at a price that exceeds that of HBM3e only recently, with this hefty premium for a legacy memory product suggesting that the AI-driven demand is relentless.
This brings us to the core of today's topic. As per recent reports, the meteoric increase in the price of memory products over the past few months is now beginning to dampen demand, especially for price-sensitive Chinese smartphones.
Accordingly, both MediaTek and Qualcomm appear to have slashed their production cadence for 4nm chips, which feature prominently in low and mid-tier smartphones. As such, this production curtailment currently equates to around 20,000 to 30,000 wafers, which corresponds to a volume of between 15 million and 20 million mobile chips.
For the benefit of those who might not be aware, MediaTek's 4nm lineup spans Dimensity 7200, 7300, 8200, 8450, 9000, 9300, and 9400 series chips. Similarly, Qualcomm's 4nm lineup spans Snapdragon 4 Gen 2 and 4s Gen 2, Snapdragon 7s Gen 2, and Snapdragon 8 Gen 3.
Finally, do note that it is not just Chinese smartphone OEMs that are facing price pressures at the moment. In fact, as we reported yesterday, Samsung has now hiked the prices of the 512GB and 1TB variants of a host of its tablets, as well as the Galaxy S25 Edge, the Galaxy Z Fold 7, and the Galaxy Flip 7 in South Korea.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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