The AI boom is squeezing the sub-$200 smartphone out of the market. For the used and refurbished industry, that is both an opportunity and a test.
By Mike Popkov
Last week, Counterpoint Research published a forecast that deserves more attention than it got: shipments of new smartphones priced under $200 are expected to fall by around 40% between 2025 and 2030. That is more than 230 million devices a year that will simply not be made, as The Register reported.
The cause is the AI data centre boom. Chipmakers are steering capacity toward higher-margin components for AI infrastructure, and the memory that goes into consumer devices is trapped between two bad choices. In the PC market, memory prices have reportedly quadrupled over the past year. Budget phones are hit hardest because components make up a larger share of their bill of materials, which leaves manufacturers little room to absorb the increase. Counterpoint's analyst Yang Wang put the outcome plainly: the affordable segment ‘will not return to its previous standing’.
The overall smartphone market is expected to recover to roughly 2025 volumes by 2030. It will just be a more expensive market.
The demand does not go away
Here is the part that gets less attention. Nobody in Belgrade, Tangier, Buenos Aires or Tokyo stops needing a phone because a memory chip got pricier in Taiwan. A phone is how people bank, work, study and reach public services. The 230 million buyers who lose their entry-level option have three choices: pay more for a new device, hold on to their current one for longer, or buy used.
The Register notes exactly these three paths. For many price-sensitive buyers, the third option may become increasingly attractive. In our view, the refurbished phones are on their way to becoming the new entry-level phones, taking on a larger role in the affordable segment.
Growth is not the same as readiness
We work with refurbishers, wholesalers, retailers and recyclers in more than 75 countries, and we would be doing the industry a disservice if we treated this as simple good news. A market that suddenly has to carry the weight of a whole lost segment is a market under stress. Four pressure points stand out.
Trust. Someone buying a $120 refurbished phone because a $120 new one no longer exists has no cushion for a bad experience. A hidden battery problem, a non-original screen, a camera that fails in low light: each one costs a customer who cannot easily afford a second try. When the used phone is the only affordable phone, the quality promise has to be real.
Consistency. Grading done by eye, device by device, varies from person to person, shift to shift and warehouse to warehouse. That was tolerable when refurbished was a niche. It does not scale to a segment that is absorbing tens of millions of extra buyers. Buyers, marketplaces and network operators need a grade to mean the same thing everywhere.
Economics. When margins are tight, a small mistake in condition assessment can erase the profit on a device. A battery that needs replacement, an overlooked camera defect or an incorrectly assigned cosmetic grade changes both the acquisition price and the expected resale value. As used devices take a larger share of the affordable market, accurate diagnostics become a pricing tool as much as a quality control tool.
Supply. This is the uncomfortable part. When new devices get more expensive, people keep their old ones longer, which slows the flow of trade-ins into the used market at the very moment demand rises. The industry cannot count on more devices arriving. It has to get more value out of each one that does: testing thoroughly, grading accurately, repairing what can be repaired, and being honest about what cannot.
The race for used devices may become as important as the race for buyers
If rising new phone prices lead to longer replacement cycles, fewer trade-ins could reach the secondary market just as demand for affordable used devices grows. Retailers, mobile networks and buyback operators may have to compete harder for each device that returns to circulation. Trade-in programmes become an increasingly important source of resale inventory.
The ability to assess a device quickly and offer a price based on its actual condition can influence both trade-in conversion and resale margins. Offers that overlook repair costs can leave little room for profit; offers that undervalue a usable phone can lose it to another buyer.
What this means for how we build
None of this is a reason for gloom. It is a reason to treat refurbishment as infrastructure rather than as a workaround. That has been our view for a long time, and the memory shortage makes it more pressing.
- Automated testing over manual checks. Functional and wireless testing that runs the same way on every device, every time, is what makes a grade trustworthy across borders.
- Objective cosmetic and defect grading. Machine vision applied to the device surface removes the subjectivity that causes disputes between sellers and buyers.
- Parts authenticity checks. When a new phone costs more, repair becomes more attractive, and so does the temptation of non-original parts. A device that looks original but is not needs to be caught before it reaches a customer who paid for the real thing.
- Certification that travels. A buyer in one market should be able to rely on a result produced in another.
- Verifiable data erasure. Each device returning to the market may still contain its previous owner’s personal data. Erasure needs to be repeatable and documented, especially when devices move between companies and countries.
- Device traceability. When thousands of devices move through testing, grading, repair and resale, businesses need a record of what happened to each unit. Linking test results, condition assessments and erasure records to the device helps reduce disputes and supports purchasing decisions.
These are not luxuries for premium devices. They matter most in the low-price segment, where margins are thinnest and where trust decides whether a customer comes back.
For us, the direction is clear. A used phone should enter a facility, be identified, tested, graded, securely wiped, priced and tracked with as little subjective decision-making as possible; that is, it should be based on global standards (such as CTIA for grading). The results should travel with the device, giving the next buyer a documented assessment to review and a clear basis for any further checks.
A more honest kind of growth
The Counterpoint forecast describes a market that stays similar in size but looks materially different in value. The opportunity, it suggests, shifts toward mainstream and premium devices, and it also warns that those tiers cannot absorb all the lost volume. Someone will serve the people left in the gap.
We believe the used and refurbished industry can be that someone, but only if it earns the role. That means building the testing, grading and certification layer that makes a second-hand phone as dependable as a new one and as easy to buy across markets. If the industry does that, the AI boom will have quietly made the circular economy in mobile devices a much larger and more serious business. If it does not, the people priced out of new phones will be priced out of a decent phone altogether.
For the second-hand phone market, this is both an opportunity and a challenge, and its players can win only if they agree on standardised grading and diagnostics. In practice, that agreement is realistic only with specialised third-party tools that apply the same criteria to every device, wherever it is processed. Our own grading solutions are already built on international standards for exactly this reason.
We would rather build for the first outcome.
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Since 2017, NSYS Group has developed software and robotic solutions for testing, grading, data erasure, pricing and processing used mobile devices, serving customers in more than 75 countries.
Companies preparing for higher trade-in or resale volumes can arrange a demo to explore how NSYS solutions fit into their current device processing workflow.
Mike Popkov is a Chief Product Officer at NSYS Group. He has been shaping the product vision across hardware, robotics, software, AI diagnostics, and grading for nearly 4 years.
Source:
1) Connor Jones, ‘AI boom could wipe 230 million budget phones a year from the market’, The Register, 24 September 2026, based on a Counterpoint Research forecast by Yang Wang.
2) The CTIA Certification website.
