The artificial intelligence infrastructure boom is set to remove a significant portion of the budget smartphone market. Counterpoint Research released a forecast showing that shipments of pocket devices priced under $200 will fall by roughly 40 percent between 2025 and 2030. This drop will eliminate more than 230 million devices annually by the end of the decade.
Counterpoint links the contraction to rising chipset and memory costs. Manufacturers also face increasingly demanding minimum specifications and a declining willingness to maintain unprofitable entry-level product lines. Cheaper devices dedicate a greater proportion of their bill of materials to component costs, giving makers less room to absorb price increases.
The overall smartphone market should recover close to its 2025 volume by 2030. However, the low-cost segment will remain substantially smaller. Yang Wang, principal analyst at Counterpoint, stated that the smartphone market will recover in unit terms, but the affordable segment will not return to its previous standing.
Wang noted that the opportunity now shifts toward better-specced mainstream devices and premium products. Higher tiers cannot absorb all the lost volume. The result will be a market similar in overall size but materially different in value and competitive profile.
This contraction could make internet access less affordable for people on lower incomes. The impact will be felt particularly in low and middle-income countries. This trend unfolds while the wealthiest companies invest heavily in building AI models.
Buyers may respond by moving to more expensive devices, keeping existing phones longer, or turning to the used and refurbished market. Counterpoint expects the mid-range to become the primary industry battleground by 2030. Manufacturers will concentrate product launches, marketing, and channel investment on better-equipped mass-market devices.
With specifications becoming less distinctive, manufacturers will likely compete on cameras, design, battery life, and durability. Premium devices will simultaneously drive revenue growth. Counterpoint expects Apple, Samsung, and Huawei to benefit from the shift.
Samsung maintains a broad portfolio across key segments and a history of accepting lower margins to preserve market coverage. Apple will likely remain the largest contributor to premium smartphone market value. Huawei's flagships and foldables should support its ongoing recovery in China.
This forecast arrives as the AI rat race impacts every part of the hardware industry. Chipmakers are directing production toward higher-margin components for AI infrastructure. This leaves less manufacturing capacity for cheaper parts used in consumer electronics.
Pressure is especially high for NAND and DRAM. PC makers have raised prices to record levels following a quadrupling of memory prices over the past year and all-time-low inventories. Chromebooks face similar pressure to sub-$200 smartphones because both rely on low bills of materials. The global AI-driven memory shortage is projected to shrink ChromeOS shipments by 27.6 percent by the end of the year. A corresponding Omdia forecast puts declines for Windows PCs and Macs at 12.1 percent and 4.8 percent respectively.
Counterpoint expects the mid-range sector to emerge as the main battleground as manufacturers adapt to these component pressures and market shifts by the end of the decade.
