Key Points
- Xiaomi has raised the price of its new Redmi K90 smartphone series. The company says the price hike is due to a surge in the cost of memory chips.
- The global AI boom is creating a shortage of conventional chips, driving up their prices.
- The new phone’s higher price was met with some disappointment from the market.
- Xiaomi is offering a temporary discount on one model to soften the blow for consumers.
Chinese smartphone maker Xiaomi is feeling the pinch from the global AI boom, announcing on Friday that a surge in memory chip prices has forced it to raise the price of its latest handsets. The company’s president, Lu Weibing, said the “rising costs of memory chips are far beyond expectations and could intensify.”
The news came after the launch of Xiaomi’s new entry-level Redmi K90 series, which disappointed the market due to its higher price tag. The base model of the new phone is priced at 2,599 yuan ($364), a hundred yuan more than its predecessor.
The price hike is a simple case of supply and demand. The global rush for specialized chips needed to power artificial intelligence has created a shortage of the more conventional memory chips used in smartphones, PCs, and servers. This has sent the cost of those chips soaring, and companies like Xiaomi are now being forced to pass those higher costs on to consumers.
In an apparent move to soften the blow, Xiaomi’s president announced that the company would offer a temporary 300 yuan ($42) discount on the most popular version of the new K90 phone for its first month of sales.
The situation is a clear example of the ripple effects of the AI boom, which is now directly affecting the prices of everyday consumer electronics.
