AI Boom Threatens the Future of Budget Smartphones

Affordable smartphones may become a thing of the past because of the explosive growth of artificial intelligence(AI). According to a new study by Counterpoint Research, the global market for smartphones priced under USD 200 is projected to shrink by 40% by 2030, a loss of roughly 230 million devices annually.

AI Data Center Boom

This dramatic shift is primarily fueled by the AI data center boom, which has triggered soaring costs for crucial components like RAM, system-on-chips (SoCs), and more. As these parts become increasingly expensive, manufacturing entry-level devices is becoming less profitable for tech companies. Consequently, the mobile industry is pivoting away from basic models and toward higher-margin mid-range and premium handsets.

Future of Budget Smartphones

While consumers may adapt by holding onto their current devices longer or turning to the growing refurbished phone market, the decline of budget smartphones presents a severe global connectivity risk. Yang Wang, a principal analyst at Counterpoint Research, warns that the loss of affordable new devices could effectively lock first-time users in lower-income regions out of mobile internet access entirely.

Though the overall smartphone market is expected to recover its total volume by the end of the decade, its composition will be permanently altered. This structural shock means that while high-end devices will continue to thrive, the dependable, sub-USD 200 budget phone may soon become a relic of the past.

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