Controversy surrounding Meizu that had been simmering since before the Lunar New Year appears to have reached a turning point.
According to information obtained by 36Kr from internal sources, Meizu recently announced a major restructuring that will see more than half of its employees leave the company, affecting roughly 400 people.
Those departing face three possible outcomes. Some will receive severance packages exceeding the legal minimum, others will move to newly separated business units, while a third group may be absorbed by partner companies. Most employees were expected to complete the necessary procedures by March 13.
As part of the restructuring, 36Kr reported that Meizu’s Pandaer lifestyle technology brand team will be spun off to operate independently, taking responsibility for its own profits and losses. Meanwhile, part of Meizu’s augmented reality glasses team is expected to be absorbed by the AR hardware company RayNeo.
Earlier, on February 27, Meizu attempted to address growing speculation, stating that it had decided to suspend in-house development of new smartphone hardware and was in discussions with third-party hardware partners.
After the restructuring, the remaining smartphone-related staff at Meizu will number about 400. According to 36Kr, those who remain are expected to be reassigned in two directions. Some may join the team working on Meizu’s Flyme automotive operating system, while others may shift toward artificial intelligence software development.
In addition, the core assets of Meizu’s smartphone division have already been packaged and integrated into hardware companies within the Geely ecosystem. These assets include software code, product documentation, technical interface documentation, engineering code libraries, and visual interaction materials.
A source familiar with the matter said most of the remaining staff are concentrated in Zhuhai, where Meizu’s headquarters is located. The team is unlikely to continue operating under the Meizu brand, and employees may eventually transition to a new corporate entity.
In response to inquiries from 36Kr, Meizu said Flyme’s open ecosystem will become the company’s foundation moving forward, forming what it described as a sustainable, closed-loop business model.
“Organizational adjustments accompanying strategic transformation are a normal part of industry development,” the company said. “Aside from suspending domestic smartphone hardware R&D, all other businesses are progressing steadily.”
Meizu added that its overseas smartphone business, AI-powered smart glasses, and Pandaer brand continue to operate normally. It also denied reports that its AR team would be absorbed by RayNeo, calling the claim inaccurate.
For many employees, signs of disruption had already emerged before the holiday.
In the weeks leading up to the Lunar New Year, Meizu began terminating outsourced staff, slowing internal approvals, and extending the holiday break while delaying the official return-to-work date. Many employees interpreted these moves as signals that the smartphone business was under pressure.
According to 36Kr, the smartphone division still had a narrow window for survival earlier this year. Before the holiday, the team reportedly attempted to pursue an acquisition by a well-known AI company, but negotiations ultimately failed.
“The other party believed the Meizu brand had no value,” a source familiar with the talks said.
In its earlier announcement, Meizu identified one major factor behind its shift: rising memory prices.
“The level of competition in the smartphone market is far beyond imagination,” the company said. “With memory prices skyrocketing, the commercialization of new smartphone products has become increasingly difficult.”
A recent report from Counterpoint Research showed that in the first quarter of 2026, DRAM prices rose 50% quarter on quarter, while NAND flash prices surged more than 90%.
The increase has significantly altered the bill of materials structure of smartphones.
According to the report, memory now accounts for 43% of total device costs for smartphones priced below USD 200, representing a 25% quarter-on-quarter increase. For smartphones priced above USD 400, memory costs are expected to account for 20–23% of total device costs by the second quarter of 2026.
The rise in memory prices has compressed profit margins across the smartphone industry.
Since late last year, China’s smartphone market has entered a period of instability.
In January, smartphone brand Realme announced that it would return to the Oppo system, aiming to improve efficiency through deeper integration.
By March, many smartphone makers had introduced the largest collective price adjustments in nearly five years. Oppo, OnePlus, Vivo, Xiaomi, and Honor raised prices across multiple product tiers by around RMB 500, (USD 72.4) with some models abandoning the segment below RMB 1,000 (USD 144.7) altogether.
The withdrawal of Meizu’s smartphone business also reflects how the surge in artificial intelligence investment is reshaping established technology sectors. Companies across the industry are reassessing their priorities, shifting resources toward AI, software, and ecosystem development while hardware margins tighten.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Qiu Xiaofen for 36Kr.
Note: RMB figures are converted to USD at rates of RMB 6.91 = USD 1 based on estimates as of March 16, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.