The AI ​​craze is destroying the cheap smartphone market—shipments of sub-$200 models could plummet 40% by 2030

The rush to build data centers for AI systems threatens a large part of the budget smartphone market: shipments of sub-$200 models are forecast to decline by 40% between 2025 and 2030, meaning that by the end of the decade, the market will lose more than 230 million such devices per year. Counterpoint study.

Analysts attribute the market decline to rising memory and chipset prices, tightening requirements for minimum technical features and manufacturers’ reluctance to support unprofitable entry-level device lines. By 2030, the overall smartphone market is expected to return to 2025 levels, but the budget device segment is expected to decline significantly. Component costs make up a large portion of the cost of low-cost equipment, and manufacturers have less and less ability to compensate for rising costs. “The focus has started to shift towards more productivity-oriented devices in the mass segment and premium models, although these categories will not be able to fully offset the sales losses in the budget segment. Therefore, the overall size of the market will remain the same, but there will be significant changes in terms of pricing and competition.”“, analysts said.

Image source: counterpointresearch.com

Due to reduced supply, Internet access will become more difficult for low-income people, especially those in countries with low and middle economic development levels. Consumers will have to buy more expensive equipment or second-hand and refurbished equipment. Counterpoint predicts that by 2030, the industry’s main competitive area will be the mid-range device segment: manufacturers will focus on launching new products, marketing and investing in sales pipelines to launch more powerful mass-market models. Specs have started to level off, and manufacturers may have to compete on design, camera quality, battery life and reliability – with higher-end models driving revenue growth.