Smartphones likely to cost more in 2025, this may be the key reason

Smartphone prices in 2025 are expected to get a 5% increase due to the growth of advanced technologies such as generative AI.

Buying smartphones will get costlier from next year, here’s why. (Bloomberg)

We are currently living in a fast-paced world where keeping up with all the latest technological trends has become integral to meeting society's needs. One of the major growth drivers is smartphones and it's ever-evolving tech. Gone are the days, when smartphones were being used as a communication medium. Now, smartphones have become our digital diary, bank, work, shopping mall, and everything else you can imagine.

With growing criticalities, the price of smartphones has also experienced a drastic increase over the past few years. And it does not come as a surprise that smartphone prices are expected to increase in coming years. Here's what the latest Counterpoint Research revealed about the growing smartphone prices. 

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Why are smartphones getting costlier?

According to a Market Outlook report by Counterpoint Research, smartphone prices tend to increase by 3 percent in 2024 and 5 percent in 2025. Now, why is there a major difference? The report highlighted several factors that are causing the price hike such as the growing cost of components required to build a smartphone, the adoption of generative AI chips, the growth in use of the 5G network, the use of advanced computing capabilities, and others. 

In recent years, we have seen a drastic shift in the use of generative AI from computers to smartphones. Consumers are increasingly demanding advanced AI features on their smartphones, causing brands to integrate competitive and advanced features into their new-generation smartphone models. This demand curve has increased the development and use of GenAI chips with improvements in the performance of CPU, NPU and GPU.

Alongside GenAI, smartphone brands are also leveraging advanced manufacturing processes such as 4nm, 3nm, and others which is causing an increase in the costs of components due to the growing complexities. Therefore, these factors will have a major impact on smartphone pricing starting in 2025 as more brands shift to integrating GenAI into their new devices. The report said, “As we enter the AI smartphone era, the integration of GenAI features is expected to continue this upward trend,” making it one of the crucial reasons for the price hike. 

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