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Smartphones Could Become 30% More Expensive Due to AI
Sentiment: NeutralHigh Priority
What Happened?
The rise in artificial intelligence demand is expected to increase smartphone prices by about 30%, particularly affecting budget devices. This trend may lead consumers to delay upgrades or opt for second-hand phones.
Key points
- AI's demand for memory components is expected to account for 60% of global memory demand by CY27.
- Memory costs have surged from an estimated $20 in CY25 to around $60-65 now.
- Budget smartphones priced below $200 are particularly vulnerable, with memory making up 60% of their total cost.
- Global smartphone shipments are projected to decline by 15% annually, reaching 911 million units in CY27.
- The affordable smartphone segment's market share could drop from 42% in CY25 to 24% in CY26.
Key insights
- Consumers may delay smartphone upgrades due to rising costs.
- Manufacturers might reduce the number of lower-priced variants to manage costs.
- The shift towards older chips could impact smartphone performance and innovation.
Market Impact
smartphone market
NegativeRising memory costs and AI demand could lead to a significant decline in smartphone shipments and increased prices.
Why it matters
The potential price increase could affect consumers' purchasing decisions, especially in the budget segment.
Source
Times of India
