ARM Expects ~1B Entry Level Smartphones in 2018, $20 Smartphones Coming This Year
When we first started covering mobile, nearly every silicon vendor I spoke with issued the same statement: eventually, all phones are smartphones. Continued scaling on process technology …
Context & Ripple Effects
ARM has been running ahead of its own forecasts for years: it called the smartphone majority two years early with the 2012 prediction that half of all mobile phones would be smartphones by 2013, and the Cortex-A12 announced last June was explicitly designed to carry that logic down from flagships into $200 midrange devices. The new numbers extend the same curve to its end point — roughly 1 billion entry-level smartphones shipping in 2018, and $20 handsets arriving later this year.
The claim matters because ARM sells licenses and royalties per chip, so a billion-unit entry tier converts process scaling directly into volume royalty growth. The story also traveled unusually far for an analyst-day style projection, with pickups across eight outlets including Ars Technica, Engadget, and SlashGear on the same day.
First-order effects
- ARM's per-unit royalty model means the entry-tier forecast is a direct volume bet: every dollar shaved off the bill of materials widens the addressable base paying ARM licensees' royalties.
- Chipmakers building on ARM cores now have a stated target — a sub-$20 total handset cost within the year — which forces them to prioritize integrated, single-die designs over discrete application processors.
Second-order effects
- Android becomes the default OS for the segment the forecast targets, since its zero-license-fee model is the only one that clears a $20 bill of materials — extending the low-end explosion the platform rode since 2011.
- Feature-phone makers lose their price shelter: when smartphones reach $20, the remaining non-smartphone market has no cost argument left and consolidates around the same silicon suppliers.
Third-order effects
- If the pattern holds, the smartphone becomes the universal computing device by default rather than by upgrade cycle, shifting the industry's unit growth from replacement demand in mature markets to first-time buyers in emerging ones — and giving ARM a second front beyond handsets, where it has already pushed its cores into networking infrastructure.
- Sustained down-market scaling pressures foundries to keep leading-edge capacity affordable for high-volume, low-margin parts, not just flagship silicon — a structural tension between process cost and unit economics.
The trend: Process scaling is collapsing smartphone prices faster than forecasters predict, turning the smartphone into the world's default computer on ARM's royalty-per-chip economics.