Soaring Memory Prices Threaten Budget Smartphones, Reshaping Global Market

Counterpoint Research's forecast for global smartphone shipments by price segment. (Counterpoint Research) Surging memory chip prices, driven by expanding investment in artificial intelligence (AI) infrastructure, are reshaping the global smartphone market. Budget devices are coming under increasing pressure from rising manufacturing costs, while premium models continue to gain ground, widening the divide between price segments. According to Counterpoint Research on Oct. 13, global shipments of smartphones priced below $200 are projected to decline by approximately 40% between 2025 and 2030, representing a reduction of more than 230 million units. Manufacturers of lower-priced devices have limited room to pass higher memory costs on to consumers, prompting them to reduce production volumes or scale back device specifications. Premium smartphones, by contrast, are forecast to achieve a compound annual growth rate of 7% over the same period. Manufacturers have greater flexibility to pass rising component costs on to buyers in the higher-priced segment, encouraging them to prioritize premium models to protect profitability. Even if total global smartphone shipments recover to approximately 1.2 billion units by 2030, the distribution of sales across price segments could look substantially different from today's market. The pressure is already evident in recent shipment figures. Global smartphone shipments reportedly fell 20% year over year in the third quarter, reaching their lowest level for the period since 2012. The decline has been attributed in part to the growing concentration of memory supply in AI data center infrastructure, which has contributed to component shortages and higher costs for smartphone manufacturers. Global smartphone retail prices have risen by approximately 20% this year, according to the figures cited in the report, as consumers increasingly extend replacement cycles or turn to used and refurbished devices. Among major manufacturers, Samsung Electronics maintained its leading position with a 23% market share, supported by initial demand for its Galaxy Z Fold8 series and stable supplies of midrange smartphones. Apple surpassed a 20% share in the third quarter for the first time, narrowing the gap with Samsung. Xiaomi, meanwhile, saw shipments decline by more than 30% as it reduced its exposure to lower-priced devices to protect profitability, bringing its market share down to 10%. Higher memory prices could also have contrasting implications for South Korean semiconductor companies. Samsung Electronics, which operates both memory chip and smartphone businesses, faces a dual impact: its semiconductor division stands to benefit from stronger memory pricing, while its mobile division must absorb higher component costs. The situation has raised the possibility that Samsung could streamline its budget smartphone lineup or introduce configurations with lower memory capacity to manage production costs. SK hynix, by comparison, is more directly exposed to the benefits of rising memory prices without bearing the manufacturing costs associated with a smartphone business. Counterpoint Research expects manufacturers to maintain their focus on production adjustments and premium devices through the end of the year, potentially increasing the financial pressure on price-sensitive consumers. The diverging outlook for budget and premium smartphones suggests that the AI-driven memory boom could reshape not only semiconductor profitability but also the structure of the global smartphone market.