- Report claims production of budget smartphones could drop by 40% by 2030
- The increasing costs of RAM and chipsets thanks to the AI data center boom are key factors in the forecast
- In addition, basic product lines aimed at the lower end of the market are becoming less profitable as minimum spec phones are overlooked in favour of portable media production devices
It could be time to start saving for your next phone, thanks to the increasing demand for RAM, processors, and SoCs, new research has claimed. The AI data center boom has driven various price rises across the electronics industry over the past few years, and now it seems that the days of the budget smartphone could be numbered – and at best, they may be hard to come by for a while.
Forecasting by Counterpoint Research estimates smartphones below the $200 figure could shrink by 40% by 2030 - which equates to the market shrinking by 230 million devices.
While mid-range, premium, and ultra-premium devices are less affected by this, those on lower incomes – particularly in poorer countries – could find internet access is off-limits.
A sharp contraction
Counterpoint Research’s study suggests the smartphone market will change considerably as higher device specifications justify higher price points in a landscape where component costs are climbing.
This “structural shock” can be traced to the current downturn, and will likely lead many people to keep their phones for longer (although those who can afford it will upgrade). It’s a scenario that could see the extension of replacement cycles by consumers and vendors alike (perhaps persuaded by market demand) and the refurbished handset market could also benefit. Handset insurance plans may also see longer subscriptions, too, further supporting the refurbished market and legacy stock supplies.
Over recent years, premium smartphones have driven the market, and the data apparently suggests this will continue. The prediction doesn’t suggest budget phones will go away entirely, but there could be new opportunities from the used phone market, dumbphones (like the Commodore Callback), and even niche/DIY solutions.
Connectivity risk
More premium phones and higher specced mid-range devices sounds good at face value. However, it does mean that regions where budget phones are vital to communications and internet access are likely to find it more difficult to achieve mobile internet connectivity.
“The smartphone market will recover in unit terms, but the affordable segment will not return to its previous standing,” said Yang Wang, a principal analyst at Counterpoint Research, noting the market size will be similar overall, but different in value.
“The opportunity now shifts toward better-specced mainstream devices and premium products, although higher tiers cannot absorb all the lost volume,” Wang adds, “there is also a wider connectivity risk, as the loss of affordable new smartphones could make it harder for first-time users in lower-income markets to come online.”
Counterpoint Research underlines that it expects the smartphone market to regain its 2025 volume by 2030, but with a much smaller budget segment.
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