AI Chip Demand Could Cut Budget Smartphone Market by 40% by 2030, Report Says

Counterpoint Research describes the shift as a "structural shock" tied to the current downturn and rising component costs. In this environment, higher device specifications are expected to justify higher price points. Mid-range, premium and ultra-premium devices are less affected by the contraction, but the report says the affordable segment will not return to its previous standing. "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. Wang noted that 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 added. "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."

The forecast has implications for replacement cycles. As component costs climb, many consumers may keep their phones for longer, while those who can afford new devices will upgrade. The report says this could extend replacement cycles for consumers and vendors alike, and it could benefit the refurbished handset market. Handset insurance plans may also see longer subscriptions, further supporting refurbished devices and legacy stock supplies.

Premium smartphones have driven the market in recent years, and the data suggests that trend will continue. Counterpoint Research does not predict that budget phones will disappear entirely. Instead, the report points to possible opportunities in the used phone market, dumbphones such as the Commodore Callback, and niche or DIY solutions.

The shift also raises concerns about connectivity. More premium phones and higher-spec mid-range devices may sound positive at face value, but regions where budget phones are vital for communications and internet access could find it more difficult to achieve mobile internet connectivity. Counterpoint Research expects the smartphone market to regain its 2025 volume by 2030, but with a much smaller budget segment.