Xiaomi's 'cheap' phones are criticized for being too expensive.

The newly launched Redmi K90 is disappointing due to its increased price. Photo: Xiaomi .

On October 24th, a Xiaomi representative acknowledged that the company is being affected by the soaring price of memory chips. This has driven up the cost of phone production. The price of the newly launched Redmi K90 series has disappointed fans due to the significant price increase.

"The pressure of production costs has affected the selling price of the new product. The cost of purchasing memory chips has gone far beyond expectations and may continue to escalate," Chairman Lu Weibing wrote on Weibo.

Xiaomi launched the Redmi K90 series on October 23rd. The base model with 12GB RAM and 256GB internal storage is priced from 2,600 CNY ( US$364 ). This is higher than its predecessor, the K80 (2,500 CNY), which was launched in November 2024.

Mr. Lu acknowledged consumer disappointment regarding the price discrepancy. The Xiaomi executive stated that the company would reduce the price of its best-selling K90 model (12 GB/512 GB) by 300 yuan. The new price will be 2,900 yuan, applicable during the first month of its release.

The global AI chip craze has tightened the supply of traditional chips. These chips are used in phones, personal computers, and servers. Chip costs have surged, boosting profits for NAND and DRAM manufacturers. Benefiting companies include South Korea's Samsung Electronics and SK Hynix.

This year's K90 Pro has a major upgrade. Besides using a top-of-the-line chip and vapor chamber cooling for gaming, it also features a dedicated subwoofer, tuned by Bose. However, this model is unlikely to be released internationally.

Redmi's K series is positioned below Xiaomi's flagships. They typically offer affordable prices, effectively meeting the needs of budget-conscious gamers.

Price increases are nothing new for Xiaomi. The process of upgrading products for users, moving them to the higher segment, has been gradually implemented year after year. Even with the Xiaomi 15 series, CEO Lei Jun asserted that users paying more for flagships was inevitable due to the increased cost of chips. In this year's K90 version, the issue is explained by the memory chip.

According to statistics, Xiaomi's high-end phones have seen a larger price increase than even Apple, which is often considered a "money-grabbing" brand with exorbitant listed prices. This stems from the Chinese brand's initial positioning, which focused on the budget-conscious customer segment. The company is known for its high-spec, low-priced phones.

CEO Lei Jun once stated that the company only takes a 5% profit margin on each product. The surplus is reinvested to benefit consumers. Recently, the company has expanded into household appliances and invested heavily in electric vehicles. This has helped boost Xiaomi's stock price. At times, Lei Jun even rose to become the richest man in China.