Elevated memory prices are beginning to clearly squeeze China’s low-end smartphones, and full-year demand pressure may deepen further

Overview

This report is Bernstein's monthly tracker for the China smartphone market in February 2026. The core conclusion is that high memory prices are now showing up more clearly in shipments, pricing, and product mix for low-end smartphones. Although February sell-through alone rose 13% YoY to 25 million units, the Lunar New Year timing shift and last year's subsidy-driven high base make the YoY read noisy; cumulative Jan-Feb shipments were down 8% YoY, and the report further expects full-year China smartphone shipments to decline 15% YoY.

Core views

First, rising memory prices are forcing OEMs to reduce low-margin low-end models and improve mix; low-end models fell 15% YoY in February, while mid-range and high-end models still grew in double digits. Second, price pressure is likely to persist; February ASP rose 14% YoY, and more explicit same-model price increases starting in March could further dampen demand. Third, premium brands are less affected: Apple is seen as a structural beneficiary due to minimal low-end exposure and TSMC supply advantages; although Huawei's unit share exceeded Apple's, its high-end Pro Max sales remained lackluster. Fourth, investment conclusions along the supply chain diverge: MediaTek has medium-term support from AI ASICs, and Luxshare and Apple supply chain names have resilience; Qualcomm and the Android low- to mid-end chain face more pronounced demand and earnings estimate downside risk.

Analysis framework

The report mainly relies on CINNO China smartphone sell-through data and compares it with CATR's sell-in data to assess inventory risk, while tracking OEM price-band structure, ASP, mobile SoC supplier shares, and OLED and foldable penetration rates. The analytical framework revolves around shipments, pricing, product mix, brand share, supply-chain feedback, and inventory divergence.

Methodology notes

• Industry monthly trackingCross-checking sell-through and sell-in

  Use CINNO terminal sales data to measure true demand, and use CATR shipment data to verify inventory risk.

  The report notes that historically, due to factors such as product obsolescence, sell-in may be about 5% higher than sell-through. After adjustment, February sell-through for both iPhone and Android brands was higher than sell-in, so inventory risk is limited.

• Price-band analysisLow-end, mid-range, high-end segmentation

  Observe the impact of memory price hikes on different models by price band.

  Low-end is defined as below RMB 2,000, mid-range as RMB 2,000-5,000, and high-end as above RMB 5,000; the clear decline in low-end shipments is key evidence of memory cost pressure.

• Supply-chain share analysisMobile SoC and display penetration tracking

  Use shares of MediaTek, Qualcomm, HiSilicon, and UNISOC, as well as OLED and foldable penetration, to assess opportunities in semiconductors and display chains.

  The report tracks mobile SoC share, flagship and sub-flagship mix, OLED penetration, and foldable adoption to assess the sustainability of growth for MediaTek, Novatek, and related supply chains.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MediaTek 2454.TT

  Mobile SoC supplier, the report's top pick

  Strengths

  Rated Outperform, target price TWD 2,250; a 3.5 percentage point MoM share gain, AI ASIC is expected to support growth starting in Q4 2026, and 2027 and 2028 EPS are above consensus.

  Weaknesses

  China smartphone market may be a headwind in 1H26, and product mix upgrades have become somewhat plateaued.

  Comparison

  Relative to Qualcomm, the report is more optimistic on MediaTek's medium-term AI ASIC growth; however, growth in its high-end SoCs still depends on overseas premium expansion at clients such as OPPO and Xiaomi.

  Risks

  Slower-than-expected overseas client expansion, continued weakness in Android demand, failure to gain flagship SoC share.

• Qualcomm QCOM

  Mobile SoC supplier, affected by Android handset builds

  Strengths

  Lower valuation, and short-term exposure may be somewhat insulated from shortages of lower-end handsets.

  Weaknesses

  Downgraded to Market-Perform, target price USD 140; the report worries that memory-driven handset headwinds will suppress builds and that earnings may still be too high.

  Comparison

  Relative to MediaTek, Qualcomm's risk bias is larger in this report; rising Apple share may also weaken its Android ecosystem opportunity.

  Risks

  Further memory price increases, handset price hikes suppressing demand, AAPL share gains, earnings estimate cuts.

• Apple AAPL

  China premium smartphone brand and supply chain anchor

  Strengths

  Low-end market exposure is essentially zero, pricing strategy is more flexible, and TSMC supply advantages give it structural strength in China's premium market.

  Weaknesses

  High-end flagship market growth is generally limited, and it has faced challenges from Huawei and other Chinese OEMs in the high-end/sub-flagship segments.

  Comparison

  The report believes Huawei's Mate 80 Pro Max high-end sales are weak, showing Apple still has a structural advantage relative to Huawei.

  Risks

  Slower China premium demand, rising reliance on promotions, improvements in competitors' premium products.

• Xiaomi 1810.HK

  Chinese Android OEM and a premiumization example

  Strengths

  Rated Outperform, target price HKD 46; its February share rose from 12.8% in January to 14.0%, and models priced RMB 2,000-4,000 and above RMB 4,000 still grew.

  Weaknesses

  February shipments were down 3% YoY, and share was below 16.3% in February 2025; growth in models below RMB 2,000 was -25%.

  Comparison

  Compared with Android vendors with greater low-end exposure, Xiaomi's premiumization strategy is still intact, though it remains influenced by industry sentiment.

  Risks

  Weakening low-end demand, price increases suppressing sales, and overseas premiumization falling short.

• Luxshare 002475.CH

  Apple supply chain and hardware manufacturer

  Strengths

  Rated Outperform, target price RMB 74; continued Apple strength supports the supply chain.

  Weaknesses

  Still exposed to the consumer electronics cycle and client concentration.

  Comparison

  Relative to the low- and mid-end Android supply chain, the Apple chain benefits more from Apple's structural resilience in China.

  Risks

  Apple demand below expectations, changes in order share, margin pressure.

• Sunny Optical 2382.HK

  Smartphone optical component supplier

  Strengths

  Rated Outperform, target price listed in the report body as HK$88; the long-term upside is seen as attractive.

  Weaknesses

  May be weighed down in the short term by weak Android sentiment.

  Comparison

  Compared with supply chains more directly supported by Apple, Sunny is more sensitive to Android demand and sentiment.

  Risks

  Declining Android demand, slower lens upgrade cycle, intensifying competition.

• Novatek 3034.TT

  OLED DDIC beneficiary

  Strengths

  Has benefited from rising OLED penetration and can in the future rely on share gains at Apple/Samsung and integration of touch functions.

  Weaknesses

  OLED penetration is already around 90%, leaving limited room for further increases and potentially slower growth.

  Comparison

  Compared with MediaTek, which still has incremental AI ASIC upside, Novatek faces a challenge of re-accelerating growth after penetration peaks.

  Risks

  Chinese competitors catching up, OLED penetration plateauing, and share gains falling short of expectations.

Key data

• February China smartphone sell-through25 million units, MoM -6%, YoY +13%The Lunar New Year timing shift and last year's subsidy-driven high base affect YoY comparability.
• Cumulative shipments in Jan-Feb 2026YoY -8%The report expects pressure to continue rising.
• 2026 China smartphone market forecastYoY -15%Bernstein's updated full-year forecast.
• February low-end handset performanceYoY -15%Versus mid-range at +41% YoY and high-end at +22% YoY, low-end pressure is the most pronounced.
• February smartphone ASPYoY +14%Mainly driven by a lower mix of low-end models; same-model price increases are expected to be more visible in March.
• Change in China Android OEM shareDown about 3 percentage points YoYThe report believes this reflects their greater low-end exposure and heavier squeeze from memory costs.
• Xiaomi February performanceShipments -3% YoY, share 14.0%Share was above 12.8% in January 2026 but below 16.3% in February 2025.
• MediaTek shareUp 3.5 percentage points MoM, down 1 percentage point YoYThe MoM improvement may have come from new products such as OPPO A6, Find X9s, and the Redmi Turbo series.
• UNISOC shareBelow 1%The report believes this shows China's 5G mobile SoC market is still a duopoly and that UNISOC lacks competitiveness.
• OLED penetrationAbout 90%, about 88% for non-Apple/Huawei smartphonesThe report believes OLED has become a mainstream feature and further upside is limited.
• Foldable penetrationBelow 3%The report expects little meaningful improvement until before the iPhone Foldable launch at the end of 2026.

Impact & implications

For investors, this means total smartphone volumes and the low-end Android chain remain under short-term pressure, and memory price hikes and handset price increases may continue to suppress demand; higher-endization, Apple supply chain names, and AI ASIC-related opportunities are relatively more resilient. MediaTek faces 1H26 handset headwinds, but AI ASIC is seen as the growth support after Q4 2026; Qualcomm, even with a lower valuation, may remain under pressure because handset builds and earnings expectations are too high; Novatek faces OLED penetration saturation and needs share gains at Apple/Samsung and OLED DDIC touch integration to sustain growth.

Risks

• High memory prices rise further and trigger broader handset price increases, suppressing end-demand.
• Lunar New Year timing shifts, a high subsidy base, and promotional activity create noise in monthly YoY data, which may affect trend assessment.
• Android low-end and mid-range model cancellations or price hikes may expand to more price bands, causing full-year shipments to come in below expectations.
• Changes in the competitive landscape between Apple and Huawei in the premium segment may alter the order of supply-chain beneficiaries.
• If MediaTek's high-end SoC and AI ASIC growth falls short of expectations, its top-pick logic may weaken.
• After OLED penetration peaks, DDIC and panel chain growth may slow.
• If foldable penetration underperforms expectations, related supply chain catalysts will be delayed.

What to watch

• The magnitude of same-model price increases by major OEMs after March and their actual impact on sales.
• The number of low-end models below RMB 2,000 that are canceled, new product launch pace, and channel inventory changes.
• The persistence of Apple's share after promotions in China and whether sales of premium models such as the Huawei Mate 80 Pro Max improve.
• MediaTek's share in sub-flagship and flagship SoCs, and the overseas expansion progress of OPPO and Xiaomi premium models.
• Whether Qualcomm handset builds and EPS expectations continue to be revised down.
• Whether OLED penetration remains around 90%, and changes in Novatek's share at Apple, Samsung, and in touch integration.
• Whether foldable penetration begins to improve ahead of the iPhone Foldable launch at end-2026.