The artificial intelligence boom is forecast to cause a dramatic contraction in the budget smartphone market, with Counterpoint Research predicting that sub-£150 device shipments will plummet by approximately 40 per cent between 2025 and 2030, eliminating over 230 million phones annually by decade's end. Rising memory and chipset costs driven by competition for AI infrastructure components are the primary culprits, combined with manufacturers' reluctance to sustain unprofitable entry-level product lines. This shift could significantly impair affordable internet access for lower-income consumers, particularly in developing nations, whilst the overall smartphone market is expected to recover to 2025 volume levels.

Component costs represent a disproportionately large share of the bill of materials for budget devices, leaving manufacturers insufficient margin to absorb price increases. Consequently, the market is expected to consolidate around mid-range and premium segments, with Apple, Samsung, and Huawei positioned as primary beneficiaries. The AI-driven competition for memory and processing capacity is affecting the entire consumer electronics industry; Chromebook shipments are expected to decline by 27.6 per cent by year's end, whilst Windows PC and Mac shipments face declines of 12.1 and 4.8 per cent respectively. Consumers may respond by purchasing more expensive devices, extending the lifespan of existing handsets, or turning to the refurbished market.