In January this year, reports emerged that ASUS would exit the smartphone market and lay off staff in its mobile division. ASUS subsequently responded, stating that while there are no plans to launch new smartphones this year, the operations of its mobile business unit remain unchanged. However, recent supply chain updates indicate that ASUS smartphone inventory was largely sold out by the fourth quarter.
With zero inventory and no new models to "carry the torch," this appears to signal the death of the brand.
The "last straw" crushing ASUS Mobile is the surge in memory chip prices. As upstream cost increases drive up smartphone prices across the board, more consumers are unwilling to pay for niche brands, preferring instead to allocate their budgets to mainstream flagship devices. Meanwhile, rising costs and shrinking margins have pushed niche smartphone brands—which were already struggling to generate profit—to the brink of survival.
Awaiting death or exiting the market may be the inevitable outcome these brands must accept after years of struggle.
The "Death List"
Around 2019, domestic niche smartphone brands underwent a brutal "purge":
Gionee collapsed within a year after its financial scandal, with total liabilities reaching nearly CNY 21.1 billion at bankruptcy; Meitu posted a farewell letter on Weibo, announcing the full licensing of its Meitu phone brand to Xiaomi Group; after ByteDance acquired Smartisan Technology, the legal representative changed, core members exited entirely, and "idealist" Luo Yonghao left the smartphone industry; 360's phone business was rumored to be suspended, with official responses claiming only a pause, but no new devices followed.
At that time, competition had reached white-hot intensity, the top-tier landscape had initially formed, and other brands, seeing little hope of "getting a seat at the table," chose to fold their cards.
This year, another round of cleansing has arrived, but it may be the last.
In February, two days after rumors of halting phone business spread, Meizu finally responded, stating it would suspend domestic R&D for new phones and undergo strategic transformation. Before the halt was reported, Meizu had already canceled the launch plan for the Meizu 22 Air, and since the Meizu 23 will not be released to the market, this effectively means the former "flagship king" has entered its countdown to extinction, soon to disappear from public view.
As a company established 23 years ago, Meizu's development has been turbulent. It started strong but suffered blurred brand positioning due to strategic errors, leading to declining sales. Subsequent founder returns and internal conflicts failed to save the situation; new models could not turn things around, leaving the brand to survive on nostalgia until Geely took over.
Three years ago, Geely acquired Meizu and established Xingji Meizu Group, which was seen as a fresh start. Then-Chairman and CEO Shen Ziyu set a goal: return to the top five in China's mid-to-high-end market within three years. However, three years later, Meizu's role remains awkward; it not only failed to achieve its grand vision but has been completely abandoned.
ASUS Mobile has also struggled in the past two years. In the "cost-performance" battlefield, the ZenFone series struggles to challenge mainland brands' "sea of machines" strategy and extreme cost control; in the "innovation" battlefield, it cannot match giants with R&D resources in cutting-edge areas like imaging and foldable screens. Consequently, product iteration has slowed, and market presence has weakened.
In fact, since last year, there have been few new moves in the phone line internally. Now that inventory is cleared, ASUS Mobile's retreat seems almost inevitable.
Also officially ending this year is Black Shark, the former "king" of gaming phones. In June, Black Shark published an announcement regarding server upgrades and service migration, stating that the Black Shark community would temporarily stop access due to server upgrades. In July, technical support engineer "Black Shark Xirui" announced that due to deep adjustments in business structure, official after-sales repair services and related support for phone products would cease.
Black Shark's last phone release was in 2022. The Black Shark 6, originally planned for 2023, died in the womb despite pre-launch hype. Over the past few years, Black Shark has not released new phones, and user attention has waned, so its end caused little market fluctuation.
In the gaming phone segment, Red Magic is now the sole survivor. Looking at the entire smartphone market, apart from those backed by major corporations, very few niche brands remain.
The Fatal Blow
As the overall pie for smartphones shrinks, the market concentrates further toward the top players.
According to IDC data, in the 2025 ranking of Chinese smartphone vendor shipments, Huawei led with 46.7 million units, followed closely by Apple and vivo with 46.2 million and 46.1 million units respectively. Xiaomi and OPPO occupied the remaining spots. Data shows these five vendors accounted for 79.4% of the total Chinese smartphone market share in 2025, indicating increasing market concentration.
The same trend applies in other markets. For instance, in North America, Apple has long been the undisputed king, with its market share rising in recent years. Data indicates that in Q1 2022, Apple shipped 19.9 million smartphones, holding a 51% market share; by Q4 2025, Apple captured 69% of the market, setting a historical record.
As consumers concentrate on top brands, the market left for niche brands naturally shrinks. This is especially true for niche phones grown in segmented markets. When top brands fill their gaps, maximize performance, and attack these niches, they possess virtually no defensive capability.
The decline of ASUS, Black Shark, and Legion (Lenovo) exemplifies this; the original market for gaming phones has been largely consumed by major manufacturers.
Of course, niche brands might have survived on nostalgia and loyal fanbases, slowly seeking new opportunities. But this hope was shattered by the upstream supply chain.
Since last year, memory chip supply has tightened, and prices have skyrocketed. Major manufacturers can amortize costs through tens-of-millions-level shipment volumes, whereas small manufacturers have no bargaining power in the supply chain. They cannot get preferential pricing and may even fail to secure goods. An employee at a leading smart hardware company stated, "Industry rumors suggest small factories simply cannot grab memory chips now; big factories can only buy them at marked-up prices, forcing downstream product prices to rise."
Moreover, most niche smartphone brands focus on the mid-to-low-end market, where profits are already thin. With memory costs surging, the phone business becomes unprofitable, turning into a loss-making venture.
IDC estimates that the proportion of storage costs in low-end models has risen from10%-15% previously to 40%-50%. Omdia's estimate is higher, suggesting this ratio exceeds 64% for models under USD 99. The further down the value chain, the weaker the ability to pass on costs. Small manufacturers like Meizu and ASUS cannot absorb costs through scale.
Not just niche brands, even massive top-tier vendors are being pushed to the edge. Transsion Holdings is a typical example. To stockpile chips, Transsion emptied its reserves and relied on borrowing, placing immense pressure on its cash flow. Financial reports show that net operating cash outflow expanded from less than CNY 5.9 billion in the first half to nearly CNY 9.9 billion in the first three quarters, compared to a net inflow of CNY 3.285 billion in the same period last year.
Stockpiling chips does not truly reduce costs but slows the rate of price increases, essentially trading cash and inventory risk for a time buffer on costs. If Transsion cannot complete price hikes and product structural adjustments within the window gained by "stockpiling," it risks being crushed.
Protecting Core Business Is Key
The storm in memory chips affects not only the smartphone industry but also the PC market. Nearly 40% of a PC's cost is consumed by memory and hard drives, pushing up retail prices and significantly suppressing replacement demand. Clearly, the squeeze of memory on the PC market has evolved from a cost issue to a structural contradiction.
ASUS's position in the PC market has always been awkward. The top three spots are long held by Lenovo, HP, and Dell, while Apple stands alone with its closed ecosystem. ASUS relies on gaming laptops to sustain its market presence. As a dominant force in the motherboard market, ASUS faces systematic contraction in the PC motherboard sector due to the AI wave, inevitably leading to business declines.
According to the latest DIGITIMES report, global shipments for the four major consumer PC motherboard makers—ASUS, Gigabyte, MSI, and ASRock—are projected to shrink by28% in 2026, a total reduction of approximately 11.7 million boards. Specifically, ASUS shipped 15 million motherboards in 2025 but managed only slightly over 5 million in the first half of 2026, projecting barely 10 million for the full year—a sharp 33% YoY drop. Fortunately, rapid growth in the AI server business provides new momentum for performance.
In this context, the phone business appears burdensome for ASUS. Compared to its core business, smartphone revenue has long accounted for less than 10% and remained consistently loss-making, never achieving stable profitability. In 2018, Chairman Jonney Shih admitted the failure of the phone business, with annual reports showing a one-time loss of approximately TWD 6.2 billion (about CNY 1.36 billion) due to restructuring.
Cutting the unprofitable phone business to focus on the core has become ASUS's most realistic choice.
Reviewing the history of China's smartphone industry, niche phones were essentially "remnants" of fierce market battles. Those surviving for years mainly depended on or were backed by hardware giants or internet majors. However, when these giants enter an era of "just getting by," maintaining core businesses becomes far more critical than using phone businesses to maintain a foothold in the mobile sector, especially when niche phones have almost no room for survival.
Lenovo's situation is similar to ASUS. Although Lenovo's AI phones have grown, they fall into the "Others" category in global smartphone rankings, with weak presence in mass consumer markets, retaining volume only in specific overseas segments. Moreover, while its AIoT product lines are broad, none have achieved national blockbuster status.
The explosion in computing power business cannot mask the imbalance in its C-end consumer hardware development.
To cut or to keep? As the memory storm sweeps the entire smartphone industry, this question has become more urgent. Currently, ASUS and Meizu (Geely) have made their choices. Lenovo may be watching, while ZTE has begun to act. Recently, reports emerged that ZTE Corporation is negotiating a partnership with a major internet firm regarding its phone business, involving packaging the ZTE phone operations.
Growth, highlights, turning points, and decline. Although all niche smartphones are now playing the prelude to their finale, they left a significant mark in the history of domestic smartphone development.
Making a dignified exit may be the best possible outcome.