Morning Brief: Storage shock reshuffles China smartphone ranks — Xiaomi retreats as iPhone demand jumps; two senior OpenAI staff reportedly leave

Storage-price shock upends the market

A sharp jump in memory prices has scrambled the global smartphone market, and China’s vendors are already paying the price. Industry reports from Omdia and IDC show Huawei (华为) and Apple occupying the top two spots in China in Q1 2026, while rankings diverge at fifth place: Omdia lists Xiaomi (小米) fifth with 8.7 million units, IDC names Honor (荣耀) fifth with 8.9 million. Who can absorb soaring DRAM and NAND costs — and who will be forced to cut volumes or raise prices? That question is reshaping strategy across brands and regions.

iPhone demand and vendor responses

Apple’s iPhone 17 series was a major growth engine in China, with Apple posting roughly 13.1 million shipments in the quarter and a reported 42% year‑on‑year rise in China, helped by packaging, modest price adjustments and subsidy windows that kept base models within government rebate thresholds. Huawei held onto strong mid‑to‑high‑end demand with the Mate 80 refresh sold at competitive pricing, while OPPO (OPPO/欧珀) and vivo (vivo/维沃) took middle‑path tactics — selective price rises and SKU reshuffling — to protect margins without wholesale cuts.

Xiaomi strategy and Lei Jun’s response

Xiaomi (小米) showed the steepest domestic decline: Omdia reports a 35% year‑on‑year fall to 8.7 million units in China, and IDC even dropped it out of the top five. Xiaomi’s strategy combined an early, premium launch cadence for the 17 Ultra to lock higher‑margin sales and deliberate inventory control in the Redmi line to avoid loss‑making shipments. It has been reported that Xiaomi founder Lei Jun (雷军) responded to criticism about the company making more entry‑level models by saying it’s “hard to deliver good smart features for ¥100,000,” a remark that highlights the tension between expanding budget reach and preserving product quality and margins.

Geopolitics, global exposure — and a sidebar on OpenAI

The broader backdrop matters: memory‑price volatility is amplified by a constrained semiconductor supply chain and recent export controls and trade frictions that have raised sourcing risk and bargaining power questions for vendors. Chinese brands still rely heavily on overseas volumes — roughly 78% of global shipments occur outside China — but those markets are softening, especially in price‑sensitive regions. Separately, it has been reported that two senior figures have departed OpenAI, a development that, while unconnected to chip markets, comes at a sensitive moment for AI leadership and governance amid intensifying US‑China tech competition.