In late July, Qualcomm told the companies that buy its chips that prices would rise by a double-digit percentage after Sept 1. The company said it had exhausted its ability to absorb higher costs from its suppliers and that it had already tried buying parts from new sources to keep those costs down.
Two months later, and Qualcomm invited me to the Snapdragon Summit in Maui, where it announced two flagship phone chips: the Snapdragon 8 Elite Gen 6 (the successor to last year’s 8 Elite Gen 5) and the Snapdragon 8 Elite Extreme Gen 6. The Extreme is a new tier on top, built, in the words of a Qualcomm spokesperson, for “the best, most aspirational devices.”
Releasing a higher-end chip alongside its flagship processor is the opposite of Qualcomm’s previous strategy. Usually, Qualcomm releases entry-level versions of its flagship processor a few months later. For example, two months after the 8 Elite Gen 5, it then released the Snapdragon 8 Gen 5, a second chip meant to bring flagship features to a wider range of phones, with OnePlus among the first brands to use it. This year, Qualcomm’s second phone chip sits above the flagship, and it seems to be a move to battle rising costs.
Chipping away
The Snapdragon 8 Elite Extreme Gen 6 chip gets everything in the standard chip, plus some headline-grabbing features. Its graphics chip has artificial intelligence (AI) cores built in, so games can draw fewer frames and let AI generate the ones in between, which the company says saves power. New packaging moves the memory away from the hottest parts of the chip, which Qualcomm says lets a phone hold its top speed for longer before it slows down to cool off. Qualcomm is also aiming the chipset at running larger AI models that run locally on the phone itself.
These new capabilities arrive as the cost of building phones – and more or less any other device – climbs due to a global memory shortage, which IDC traces to AI data centres taking up manufacturing capacity that used to serve phones and PCs. According to figures posted by smartphone tipster Abhishek Yadav in May, last year’s 8 Elite Gen 5 cost phone makers between US$240 (RM980) and US$280 (RM1,143) per chip, and the top Gen 6 chip will cost more than US$300 (RM1,225). Qualcomm hasn’t confirmed either number, stating that it never comments on pricing. When I asked Qualcomm ahead of the event whether the memory crisis influenced the decision to split its lineup, the company reaffirmed that it doesn’t comment on pricing – but it’s hard to imagine it didn’t.
A new top-tier of its flagship mobile processor allows the company to charge more without raising the price of the processor most partner brands buy. The standard chip keeps its name and its place as the successor to last year’s flagship, which means phone makers can hold their mainstream flagships closer to this year’s prices and put the extra cost into their most expensive models. IDC predicted in February that global smartphone shipments would fall 12.9% this year, the steepest drop in more than a decade, while Counterpoint Research expected premium phones to hold up better than cheaper ones.
It’s not the first time we’ve seen a company do this – Apple has done a similar thing since 2022, when it gave its new A16 chip only to the iPhone 14 Pro models and kept the standard iPhone 14 on the previous year’s A15. Apple just announced the US$1,199 (RM4,897) iPhone 18 Pro, which costs US$100 (RM408) more than the iPhone 17 Pro did a year ago. The A20 Pro inside the Pro models is Apple’s first chip made with the newest 2-nanometre manufacturing process. Like Qualcomm’s Extreme, it uses new packaging that moves the memory away from the chip’s heat, which Apple says delivers up to 40% better sustained performance.
The bill for smartphone buyers
Phone makers have already started passing higher component costs on to customers. Samsung raised the starting price of the Galaxy S26 to US$899.99 (RM3,675) this year – which is US$100 (RM408) more than last year’s Galaxy S25 – and the Galaxy S26 Plus went up by the same amount. It held the Galaxy S26 Ultra at a starting price of US$1,299.99 (RM5,309.55), but charged US$80 (RM326.74) more for the 512GB model and US$140 (RM571.80) more for the 1TB version. In the US, those phones run Qualcomm’s Snapdragon 8 Elite Gen 5, a chip Samsung bought before Qualcomm’s September price rise took effect.
The price increases are expected to keep coming. Counterpoint Research estimated in March that memory alone would add US$100 (RM408) to US$150 (RM612.65) to the cost of building a flagship phone by mid-2026. It expects average smartphone selling prices to rise 6.9% this year, and IDC has forecast a record average selling price of US$465 (RM1,899.43). Counterpoint has also found some brands keeping costs down by using older camera modules and reused components, which leaves buyers paying the same for less.
Next year’s Android flagships will be built with pricier memory and a Qualcomm chip that costs more after September’s increase, and the Extreme will sit at the top of that pile. Phone makers now have a choice. They can opt for the Snapdragon 8 Elite Extreme Gen 6 with the very best of Qualcomm’s offerings and likely increase the price of their flagship smartphone. Or, they can opt for the regular Snapdragon 8 Elite Gen 6, which isn’t quite as powerful, and swallow any potential price increase. Among the first devices to sport the new chip will be the Xiaomi 18 Pro and Motorola Signature 27. – Inc./Tribune News Service
