AI is killing the lower priced smartphone in emerging markets
Transsion, Oppo, Xiaomi and others are struggling as booming memory costs weigh
Welcome back to our latest weekly email. If you’re one of the new subscribers, Mondays are a recap of the previous week. Today, we look at the end of an era for cheap smartphones, thanks to the AI industry’s booming appetite for memory.
That’s the takeaway from an insightful feature from David Oaks, who explains how the initial impact is being felt by emerging markets where budget phones simply can’t be produced and sold for less than $100 any longer.
We’ve tracked Korea’s AI boom, with SK Hynix and Samsung posting record revenues as demand for high bandwidth memory (HBM) spikes as the demands that AI places on compute powers necessitates more memory, and more advanced memory systems. Global memory makers are already at capacity, and booked for years in advance, which means producing the type of memory required in smartphones is secondary, which creates greater scarcity and increased prices.
That’s hitting the brands that previously performed the miracle of delivering a smartphone experience for as little as $50, and in turn the consumers who buy said devices, as Oaks notes:
That means that the budget smartphone makers have been forced to pass memory costs onto consumers: smartphones that sold for $50 are now selling for $120 or more. And price-sensitive consumers have responded by simply not buying phones.
In the early months of 2026, Transsion announced that its net profit for 2025 had fallen by 54 percent, and that it would cut its annual shipment target by 40 percent. We’re seeing the same with other low-market and mid-market smartphone companies.
Oppo slashed its shipment target by more than 20 percent; Vivo, in the same position, cut by nearly 15 percent. In the first quarter of 2026, Xiaomi’s annual shipments fell 19 percent year over year.
The impact is hitting across the board. Indonesia, for example, saw overall smartphone shipments decrease 9% year-on-year in the first quarter of this year, but the premium segment was up 30%.
That’s indicative of a trend that puts Apple in a good spot. It had to stump up a premium to secure memory from Samsung but, having done so, its devices appeal even more than before. The differentiation of product Apple sells makes the lower priced models competitive on cost which is powerful alongside Apple’s brand and the life expectancy of an iPhone.
Anecdotally, the base iPhone 17 is drawing attention in India and possibly other markets, though where things go from here remains to be seen.
In case you missed our editions last week, we wrote about:
The Manus co-founders are raising $1 billion to lodge an audacious bid to buy back their startup
Uber is taking an interest in Asia again after making a major investment
Singapore is making itself an AI deployment hub and OpenAI, Google and Nvidia are in for the ride
Malaysia welcomed its first AI IPO as SkyeChip went public raising $90 million
India’s Uber rival Rapido is revving up after raising $250 million
Apple Pay is stalling in India because big banks there don’t really need it
US prediction market platforms Polymarket and Kalshi continue to operate in India, despite a warning
Local rivals are competing with Nvidia to offer ‘sovereign’ alternatives in Asia
Amazon assured us that it is spending a lot of money on AI in Southeast Asia
If you don’t manage to open our emails some days, make sure you follow us on LinkedIn or WhatsApp so you don’t miss a story or insight.
See you tomorrow,
Jon
China
DeepSeek founder Liang Wenfeng told investors in the company’s $10B funding round that he will prioritise AI research and open-source models over near-term profits link
CATL plans to invest in DeepSeek’s funding round as it expands sales of power equipment to AI data centres link
DeepSeek is making its 75% discount on the V4-Pro model permanent link
Funding for China’s AI startups nearly tripled year on year in the first quarter to more than CNY110B ($16.2B) link
Shein acquired sustainable fashion Everlane for about $100M, marking a sharp drop from its earlier billion-dollar ambitions and an antidote against concerns around Shein’s environmental footprint link
Nvidia CEO Jensen Huang said he expects China to eventually reopen to US-made AI chips link
But China banned imports of a new Nvidia gaming chip designed to comply with US export controls link
And China has yet to allow a single purchase of Nvidia’s H200 chip six months after Trump approved it for sale link
Moonshot AI plans to overhaul its corporate structure ahead of a Hong Kong IPO to align with Beijing’s tighter overseas listing rules link
Yangtze Memory Technologies has started the process for a long-awaited IPO to tap investor demand for AI-linked chipmakers link
ChangXin Memory Technologies reported a 1,688% jump in quarterly profit as AI demand and higher DRAM prices lifted revenue link
IDG Capital is seeking to raise about $2B for a growth fund focused on consumer tech and other consumer businesses including in China link
A previously unknown flaw in Huawei enterprise router software triggered a nationwide telecoms outage in Luxembourg last year link
US senators will introduce legislation to help allied governments buy American AI technology and counter China’s overseas influence link
Alibaba unveiled its Zhenwu M890 AI accelerator as it expands its push to build a full-stack AI ecosystem link
Alibaba also unveiled new AI models, cloud infrastructure and chips as it pushes to become China’s AI factory link
The European Commission will propose temporarily lifting sanctions on Yangzhou Yangjie Electronic Technology after automakers warned of supply chain disruption link
SMIC won approval to acquire the remaining 49% stake in its Beijing foundry unit in a deal valued at CNY40.6B ($5.97B) link
Wingtech Technology sued Nexperia and five other entities, seeking CNY8B ($1.18B) in compensation over restrictions on its control of the Dutch chipmaker link
TP-Link is facing growing scrutiny in Washington over its ties to China as it tries to expand in the US market link
Foreign private equity firms are retreating from China’s data centre sector as tighter cybersecurity rules make overseas ownership harder link
China is accelerating construction of a national computing network to turn AI infrastructure into a public utility as token demand surges link
Xpeng has begun mass production of robotaxis in Guangzhou link
Baidu reported a smaller-than-expected 1% drop in quarterly revenue as growth in its AI businesses offset weakness in its core internet operations link
India
Simplismart is in talks to raise $20M from Nvidia at a valuation of about $100M as the chipmaker deepens its India AI push link
An Indian court ordered Apple to cooperate with an antitrust probe into the iPhone apps market, rejecting its bid to pause the case link
A grey market for discounted AI credits is emerging in India as founders resell tokens from Amazon, Microsoft, OpenAI and Anthropic link
Microsoft’s biggest India data centre is on track to open by mid-2026 as demand for Azure and Copilot grows link
Peak XV Partners joined UK-based Primer’s $100M funding round, extending its run of overseas bets link
Scapia raised $63M in a General Catalyst-led round that more than doubled its valuation to more than $500M link
Shastra VC launched a $100M fund to back deeptech, defence, AI and renewable energy startups link
SolarSquare is in talks to raise $55M to $60M in a Series C at a valuation of $450M to $500M link
A viral video of Indian garment workers wearing camera-equipped headbands has raised fears that factories are using their movements to train AI systems link
Southeast Asia
Grab will take control of Indonesian digital lender Superbank after its combined ownership rose above 50% link
US authorities extradited a Ukrainian woman from Thailand to face conspiracy charges tied to the alleged Forsage crypto Ponzi scheme link
The US and the Philippines are moving “quickly” on a planned 4,000-acre AI hub in the Philippines link
Filipino virtual assistants are using AI tools to power LinkedIn thought leadership services for Western executives for as little as $7 an hour link
Vietnam enacted one of the world’s first comprehensive AI laws, setting risk-based rules for AI models and deepfakes link
Singapore revoked the major payment institution licence of crypto liquidity provider BSQ over serious regulatory breaches link
Doozy Robotics raised seed funding from Cocoon Capital, though it did not disclose the amount link
An Indonesian court sentenced the head of Terra Drone’s local unit to 16 months in prison over a fire that killed 22 employees link
Malaysia will require online platforms to limit account registration for users under 16 and tighten content governance from 1 June link
Taiwan
AMD pledged to invest more than $10B across Taiwan’s AI ecosystem link
The AI boom is generating a fresh Asian savings glut led by soaring chip exports from Taiwan and South Korea, according to Oxford Economics link
Nvidia CEO Jensen Huang called on Super Micro to tighten compliance after Taiwan detained three people over allegedly mislabelled AI servers link
Taiwanese authorities are seeking to detain three people accused of using forged documents to smuggle Nvidia AI chips to China link
Japan
Polymarket appointed a Japan representative and is lobbying for approval of prediction markets by 2030 link
Japan is drafting cybersecurity guidelines to use advanced AI tools such as Anthropic’s Claude Mythos to detect and fix software vulnerabilities link
Memory maker Kioxia is preparing a US float to boost liquidity and broaden its investor base link
Japan plans to let dual-use tech startups receive advance payments on government contracts to ease financing pressure link
SoftBank faces growing internal concern over Masayoshi Son’s $60B-plus bet on OpenAI link
Japan will soon issue guidelines encouraging startups to consider acquisitions as an alternative to IPOs link
South Korea
LetinAR raised $18.5M ahead of a planned 2027 IPO as competition heats up in AI smart glasses link
Samsung reached a tentative last-minute deal with its labour union, averting a strike at the world’s biggest memory chipmaker link
Samsung will pay about KRW40T ($26.6B) in bonuses to semiconductor staff after striking a last-minute deal with labour unions link
Samsung’s last-minute profit-sharing deal averted a strike but deepened tensions over a widening bonus gap between chip staff and other workers link
Hong Kong
Morgan Stanley has issued restricted iPhones and iPads to its Hong Kong investment banking team for use in mainland China amid data compliance concerns link