Why one may have to pay more to buy smartphones in 2025

Smartphones are becoming increasingly expensive, driven by a combination of factors including the rising cost of advanced components, the transition to 5G technology, and the integration of cutting-edge features like generative AI.

According to Counterpoint Research, the global average selling price (ASP) of smartphones is projected to rise by 3% in 2024 and an additional 5% in 2025. This upward trend is largely attributed to the increasing demand for premium devices equipped with powerful processors and advanced AI capabilities.

GenAI, chips and more
Generative AI, in particular, is a significant driver of smartphone premiumization. As consumers become more interested in AI-powered features, smartphone manufacturers are investing heavily in developing SoCs with enhanced CPU, NPU, and GPU capabilities. This increased complexity and performance come at a higher cost. “As we enter the AI smartphone era, the integration of GenAI features is expected to continue this upward trend,” the report said.

The transition to advanced manufacturing processes, such as 4nm and 3nm, is also contributing to rising component costs. These processes enable smaller, more efficient chips but require significant investments in research and development.

In addition to hardware advancements, the increasing complexity of software and AI algorithms is further driving up costs. As smartphones become more sophisticated, manufacturers need to allocate more resources to software development and optimization.

While the rising prices may be a concern for consumers, the benefits of these advancements are undeniable. AI-powered smartphones offer a range of innovative features, from improved camera performance to more intelligent virtual assistants. As technology continues to evolve, we can expect to see even more powerful and feature-rich smartphones in the future.