Sub-$200 smartphone market could shrink 40% by 2030 as component prices climb

Global shipments of smartphones priced under $200 could fall by roughly 40% between 2025 and 2030. According to a new forecast from Counterpoint Research, by the end of the decade manufacturers will ship more than 230 million fewer budget devices a year than they did in 2025.

The overall smartphone market, however, is not facing a comparable collapse. Counterpoint Research projects about 1.2 billion smartphones shipped in 2030 – only slightly below the 2025 volume.

What changes first is the structure of the market. Shipments of devices priced at $200 and up are expected to grow by about 26% over the same period, while the most affordable segment will remain significantly smaller than before.

Cheap smartphones are hit harder by rising costs

The main problem is the sharp rise in the cost of memory, processors and other components. In budget models, components account for a larger share of the final price, and thin margins leave manufacturers unable to simply absorb the higher costs.

At the same time, minimum smartphone requirements keep rising: users expect more RAM and built-in storage, 5G, better cameras, long software support and, increasingly, AI features.

Back in late 2025, Counterpoint warned that the cost of building devices under $200 had risen by roughly 20–30%, while mid-range and high-end models saw increases of about 10–15%.

In 2026 the pressure intensified. According to more recent analyst data, memory has become one of the most expensive components in a smartphone, and DRAM and NAND makers are directing more and more capacity to server and AI workloads, where margins are significantly higher.

That makes the AI infrastructure boom an important factor behind the current shortage, though not the only reason the cheap segment is shrinking.

Buyers won’t necessarily move up to pricier models

Counterpoint does not expect the disappearance of hundreds of millions of budget devices to automatically produce a matching increase in the next price tier.

Some buyers will indeed move up to more expensive smartphones, but many will keep their current devices longer or choose used and refurbished models.

The forecast for the mid-range segment points the same way: its volumes remain relatively stable over the long term. If owners of cheap phones were simply buying more expensive devices en masse, this category would be the one growing much faster.

The premium segment, by contrast, will keep growing at about 7% a year and take an ever larger share of industry revenue, according to Counterpoint.

Emerging markets will feel the shift most

A shrinking supply of sub-$200 smartphones could become a problem not just for manufacturers.

In countries with relatively low incomes, device cost remains one of the main barriers to mobile internet access. The disappearance of the cheapest new models could slow the shift of users from feature phones and shared family devices to smartphones of their own.

Analysts expect a noticeable improvement in component supply starting around 2028, when memory availability should rise, prices stabilize and some pent-up demand returns to the market.

Even so, the budget segment will not return to its former scale, according to Counterpoint’s forecast. Manufacturers will increasingly focus on the mid-range and premium tiers, where higher device prices make it easier to offset rising component costs.