[Edaily Reporter Shin Yeong-bin ] Low-end smartphones in the U.S. market are bearing the brunt of rising memory prices driven by the expansion of artificial intelligence (AI) data centers.

According to market research firm Counterpoint Research on the 13th, U.S. smartphone sales in the second quarter of this year fell 5% year-over-year. This decline is attributed to a combination of factors: reduced consumer purchasing power due to rising oil prices and inflation caused by conflicts in the Middle East, compounded by rising memory prices.

Counterpoint analyzed that demand for RAM has surged significantly as AI infrastructure deployment expands, particularly among hyperscalers, leading to higher memory costs for smartphone manufacturers. In particular, manufacturers of low- to mid-range smartphones—which struggle to absorb rising costs due to their low product prices—were hit hardest.

Second-quarter sales for the four major manufacturers in the U.S. smartphone market—Apple, SamsungElectronics(005930), Motorola, and Google—declined by 4% year-over-year. In contrast, sales for all other manufacturers plummeted by 45%.

The report explains that while large manufacturers can secure component inventory at relatively favorable prices by leveraging their purchasing power, small and medium-sized manufacturers have found it increasingly difficult to absorb the rising costs of memory and storage devices. Following last year’s tariff concerns and a sluggish prepaid phone market—which led some small and medium-sized brands to scale back or withdraw from the U.S. market—cost pressures are now mounting further. HMD also withdrew from the U.S. market last year.

Ultra-low-cost smartphones priced under $100 were hit the hardest. Sales in this price range fell 64% year-over-year in the second quarter. This was due to manufacturers halting shipments of ultra-low-cost products or raising prices to maintain profitability.

In particular, sales of white-label smartphones—sold under carriers’ own brands—have dropped significantly. This is because rising component costs have narrowed the price gap between white-label products and entry-level models from major manufacturers such as SamsungElectronics and Motorola.

Although sales volume in the U.S. prepaid phone market fell by 11% in the second quarter, SamsungElectronics and Motorola actually expanded their market share. This was the result of carriers leveraging SamsungElectronics’ Galaxy A series and Motorola’s Moto G series as their flagship products to attract customers switching carriers, while competing mid-to-low-end brands withdrew from the market.

Changes were also evident in the market structure by price segment. As Motorola raised prices for some Moto G series models in the second quarter, the sales share in the $200–$299 price range increased approximately threefold compared to the same period last year. SamsungElectronics also raised the price of the Galaxy A17 by $50 last month.

The upward trend in smartphone prices is expected to continue into the second half of the year. Counterpoint forecasts that the average selling price (ASP) of smartphones in the U.S. will rise further in the third quarter, anticipating that Apple will raise prices for the iPhone 18 series. Since Apple typically accounts for more than half of U.S. smartphone sales in the third quarter, changes in iPhone prices have a significant impact on the overall market ASP.

However, sales volume will depend on the extent to which U.S. mobile carriers subsidize the price increase. Counterpoint anticipates strong replacement demand, particularly among iPhone 15 series users. The analysis suggests that sales could remain robust if carriers continue to offer the iPhone 18 for free or at a price close to free even after the price hike.

Counterpoint predicted, “Amid ongoing price hikes across the market and intensifying profitability pressures on other low-cost smartphone manufacturers, the U.S. prepaid phone market is likely to undergo further consolidation, centered on SamsungElectronics and Motorola.”