Smartphone Prices Rise: Premiumization Trend Accelerates, AI Technology Fuels Growth

Smartphone Prices Rise: Premiumization Trend Accelerates, AI Technology Fuels GrowthMarket research firm Counterpoint Research released a report stating that the global average selling price (ASP) of smartphones reached $365 in 2024, representing a 3% year-over-year increase. The premiumization trend is accelerating, with sales of smartphones priced over $1,000 surging by 18% year-on-year

Smartphone Prices Rise: Premiumization Trend Accelerates, AI Technology Fuels Growth

Market research firm Counterpoint Research released a report stating that the global average selling price (ASP) of smartphones reached $365 in 2024, representing a 3% year-over-year increase. The premiumization trend is accelerating, with sales of smartphones priced over $1,000 surging by 18% year-on-year. Consumer demand for high-end devices is pushing major smartphone manufacturers to accelerate the integration of generative AI technology, expanding AI capabilities.

The report points out that the rise in smartphone ASPs is closely related to the increasing bill of materials (BoM) costs, with the rising price of mobile phone chips (SoCs) being a major factor. For example, Xiaomi's newly released 15 series, which features the Qualcomm Snapdragon 8 Gen 2 for Galaxy chip, has seen a $70 price increase compared to its predecessor.

Counterpoint data shows that the global smartphone ASP averaged $349 in the third quarter of 2024, setting a new Q3 record. The average selling prices for the top five vendors are as follows: Apple $909; Samsung $295; OPPO $246; Vivo $214; and Xiaomi $148.

With manufacturers adopting advanced processes like 4nm and 3nm, wafer fabrication costs are projected to rise starting in 2025, affecting product pricing for companies such as Qualcomm and MediaTek. Additionally, rising memory prices have also significantly impacted overall costs. In the third quarter of 2023, memory chip prices ended their decline and entered a new upswing, with spot prices for DRAM and NAND increasing by over 60% on average.

The report highlights that the accelerated premiumization trend is a major driver of rising smartphone prices. Growing consumer demand for high-end devices is pushing manufacturers to continuously enhance product features, introducing more advanced chips, cameras, displays, and other technologies. This leads to increased costs, eventually reflected in the selling price. Meanwhile, the application of generative AI technology is also contributing to rising smartphone prices. The inclusion of AI features necessitates higher research and development costs for manufacturers, while also offering consumers greater value.

The report predicts that smartphone ASPs will continue to rise in the coming years, with the premiumization trend further accelerating. The widespread adoption of 5G networks and the emergence of new applications will lead to smartphones assuming more functionalities, increasing the demand for better hardware performance and software capabilities, ultimately propelling the continued growth of the high-end smartphone market share.