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Coolpad Rides the China Phone Slide. Why Margin Risk Lingers
Coolpad's low-cost model lineup makes it the most exposed as memory cost hikes crush 618 discounts. Sales fell 13% during China's biggest shopping festival.
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Smartphone sales in China dropped 13% during the June 618 shopping festival compared with a year earlier, data showed. Handset makers trimmed promotional discounts to offset higher memory chip costs, the report said.
The 618 festival, which runs June 1 through June 18, is one of China's biggest e-commerce events. Brands typically offer deep discounts to clear inventory. This year the price cuts were smaller. The reason: memory chip prices have climbed sharply over the past year.
DRAM and NAND flash costs rose after Samsung, SK Hynix, and Micron cut production capacity. The three suppliers control most of the global memory market. Their output cuts, aimed at stabilizing prices after a 2023 slump, pushed contract prices higher through the first half of 2024. Handset makers, which buy memory in bulk, saw their bill of materials rise. To protect margins, they reduced the discounts offered during 618.
The result was weaker sales volume. Total smartphone units sold during the festival fell to roughly 23 million, according to the data. That compares with about 26.5 million a year earlier. The decline was steeper than the overall market's contraction in the first quarter, when shipments fell about 6%.