AI boom could wipe 230 million budget phones a year from the market

The AI datacenter boom is projected to significantly impact the budget smartphone market, with shipments of sub-$200 devices expected to decline by 40% between 2025 and 2030, resulting in over 230 million devices removed from the market. This contraction is primarily driven by rising memory and chipset costs, more stringent minimum specifications, and manufacturers' reduced willingness to maintain unprofitable entry-level product lines.

The overall smartphone market is anticipated to recover near its 2025 volume by 2030, but the low-cost segment is likely to remain considerably smaller. Counterpoint Research's Yang Wang notes that the affordable segment will not regain its previous size. The market will shift towards better-spec'd mainstream devices and premium products, though high-end devices cannot absorb all the lost volume.

This contraction may make internet access less affordable for low-income individuals, especially in low and middle-income countries, as wealthier companies invest in building more complex AI models. The mid-range segment is expected to become the industry's main battleground by 2030, with manufacturers focusing on better-equipped mass-market devices.

Competitors will likely focus on design, cameras, battery life, and durability, while premium devices will drive revenue growth. Industry leaders such as Apple, Samsung, and Huawei are expected to benefit from the shift. Chipmakers are redirecting production toward higher-margin components for AI infrastructure, leaving less capacity for cheaper consumer device parts.

This pressure is particularly acute for DRAM and NAND. PC makers have raised prices to record levels due to a quadrupling of memory prices over the past year, and Chromebooks are also facing similar pressure. The global AI-driven memory shortage is expected to shrink ChromeOS shipments by 27.6% by year-end, while Windows PCs and Macs will see declines of 12.1% and 4.8%, respectively.