The prices of smartphones are increasing due to being equipped with advanced components, 5G connectivity support and AI-powered features. An Insight report estimates a 3% increase in the global average selling price (ASP) for smartphones in 2024, followed by a 5% increase in 2025. This has happened due to the increasing demand for premium devices with powerful processors and advancing AI, especially Generative AI. Smartphone makers are also making big investments in 4nm and 3nm manufacturing processes, which boost efficiency but also increase costs. Additionally, the increasing complexity of software and AI algorithms requires more resources, further contributing to rising prices.
Counterpoint Research’s Insight Report (via TOI) shows that the average selling price (ASP) of smartphones is expected to increase by 3 percent in 2024 and by another 5% in 2025. Many reasons have been cited behind this, such as increasingly expensive technology, work on advanced AI-powered features and much more. The demand for advanced components as well as major changes in devices due to 5G technology have also been attributed to this.
The report says that the integration of cutting-edge technology like generative AI into smartphones has also increased the cost. The company now every year tries to take the existing chipset range one step further and make it more powerful. At the same time, there is now pressure on all smartphone manufacturers to equip their software with various types of AI features.
As smartphone users become more interested in AI-powered features, smartphone manufacturers invest more in trying to make SoCs more advanced with advanced CPU, NPU, and GPU capabilities. This also affects the cost of manufacturing smartphones, which further impacts their prices in the market.
Certainly, rising prices can be a matter of concern for customers, but we also have to adopt a positive attitude regarding the advancement of technology at such a rapid pace. AI-powered smartphones help us with everything from better camera performance to making our everyday tasks easier.
