AI chip demand puts 230 million budget smartphones at risk by 2030

Counterpoint Research forecasts a 40% contraction in sub-$200 smartphone shipments as AI infrastructure drives up the cost of memory and core components, threatening access to affordable mobile internet.

Counterpoint Research expects the sub-$200 smartphone segment to contract sharply by 2030 as the artificial intelligence build-out pushes up the cost of memory chips and core components. The forecast, reported by TechRadar Pro, suggests shipments of budget handsets could fall by 40%, removing more than 230 million devices from the market each year.

The pressure comes from the same supply chain that feeds AI servers. Higher demand for RAM, processors and system-on-chips is lifting component prices, which makes low-margin entry-level phones harder for manufacturers to justify. According to the research, the result is not the disappearance of cheap phones altogether, but a much smaller market in which manufacturers are likely to concentrate on better-specced mid-range and premium models.

That shift could have wider consequences than a simple change in handset mix. As Counterpoint’s principal analyst Yang Wang told TechRadar Pro, the smartphone market may recover in unit terms by 2030, but the affordable segment will not regain its former scale. Wang also warned that the loss of low-cost new devices could create a connectivity risk for first-time users in lower-income markets, where budget smartphones remain a main route to mobile internet access.

The research points to a market that becomes more expensive, more segmented and less accessible at the bottom end. Consumers may keep phones for longer, while the refurbished market and handset insurance could become more important as replacement cycles stretch out. At the same time, niche options such as basic feature phones and specialist low-cost devices may find a larger role as the cheapest smartphones become harder to source.