The global surge in artificial intelligence infrastructure could erase more than 230 million budget smartphones from the market annually by 2030, according to a forecast published this week by Counterpoint Research. Shipments of devices priced under $200 are projected to contract by roughly 40 percent between 2025 and the decade's end. The decline stems from AI-driven demand siphoning production capacity toward data center components, leaving less room for the cheaper parts that power entry-level phones.
Counterpoint forecasts the overall smartphone market will bounce back to near its 2025 volume by 2030, but the affordable segment won't recover its former scale. Component expenses devour a larger share of the bill of materials for cheaper handsets, giving manufacturers less cushion to absorb price hikes. Memory and chipset costs are climbing as producers prioritize higher-margin AI infrastructure parts over the relatively inexpensive components used in consumer gadgets. The squeeze is especially severe for DRAM and NAND, where inventories have hit all-time lows and prices have quadrupled over the past year. PC makers have already raised prices to record highs, and Chromebooks face similar pressure—an Omdia forecast cited in the report expects ChromeOS shipments to shrink 27.6 percent by year's end, compared to 12.1 percent for Windows PCs and 4.8 percent for Macs.
"The smartphone market will recover in unit terms, but the affordable segment will not return to its previous standing," said Yang Wang, principal analyst at Counterpoint. The report finds the opportunity is shifting toward better-equipped mainstream devices and premium products, though higher price tiers can't absorb all the lost volume. The result will be a market similar in overall size but fundamentally different in value and competitive makeup, the analyst noted.
The contraction threatens to make internet access less affordable for people on lower incomes, particularly in low and middle-income countries, even as wealthy companies funnel resources into AI models. Buyers may respond by purchasing more expensive devices, holding onto existing phones longer, or turning to used and refurbished handsets. Counterpoint attributes the crunch to rising memory and chipset costs, increasingly demanding minimum specifications, and manufacturers' fading willingness to sustain unprofitable entry-level product lines. Chipmakers are channeling production toward higher-margin components for AI infrastructure, leaving less capacity for the relatively cheaper parts consumer devices require.
By 2030, the mid-range is expected to become the industry's primary battleground as manufacturers concentrate product launches, marketing, and distribution investment on better-equipped mass-market devices. With specifications growing less distinctive, competition will likely center on design, cameras, battery life, and durability, while premium devices drive revenue growth. Apple, Samsung, and Huawei are forecast to benefit from the shift—Samsung's broad portfolio and history of accepting lower margins should help it maintain market coverage, Apple is expected to remain the largest contributor to premium smartphone value, and Huawei's flagships and foldables should support its ongoing recovery in China. The forecast underscores a fundamental reordering of the smartphone landscape, where the world's poorest users may find themselves priced out just as the industry's wealthiest players double down on technologies that redirect supply chains away from their needs. Manufacturers face a choice between sustaining access for emerging markets and chasing margins in segments where AI-driven cost pressures are easier to pass along.