In 2024, global smartphone shipments were 1.2b, supplemented by ~200m feature phones and 350m refurbished smart phones that generate close to $1t in revenue for phones alone. The smart phone accounts for the largest revenue segments for semiconductors, cameras, wireless services and software. The major criticisms of smartphones has been their rising costs and the speed of adopting new technology and form factors, which has been a boon to lengthening replacement times and increasing refurbished phone sales. Fresh off its success in mandating the use of USB connectors, the European Union (EU) is back with an Ecodesign for Sustainable Products Regulation (ESPR) targeted for June 20, 2025. The EU comes at the task with a history of experience in the mobile phone market from:
- Nokia (Finland) – Dominated the mobile phone market in the late 1990s and early 2000s. After selling its mobile division to Microsoft in 2014, the Nokia brand returned to phones under HMD Global (also Finnish) in 2017.
- Ericsson (Sweden) – A pioneer in mobile technology that later formed Sony Ericsson as a joint venture with Sony. The joint venture ended in 2012 when Sony acquired Ericsson’s share.
- Siemens (Germany) – Was a significant mobile phone manufacturer until 2005, when it sold its mobile phone division to BenQ.
- Alcatel (France) – Originally a French company, though the Alcatel mobile brand is now owned by TCL Corporation (Chinese).
- Philips (Netherlands) – Produced mobile phones until the early 2000s.
- Sagem (France) – Was a major French manufacturer that exited the mobile market in the late 2000s.
- Wiko (France) – A newer French brand, though majority-owned by Chinese Tinno Mobile.
- Fairphone (Netherlands) – A Dutch manufacturer focused on sustainable and ethical smartphones.
- Doro (Sweden) – Specialized in easy-to-use phones, particularly for seniors.
- Gigaset (Germany) – Formerly part of Siemens, now makes smartphones alongside its main cordless phone business.
In the name of improving consumer products, the EU will compound the low growth of smartphones, which already face issues of higher costs and extended replacement times by forcing changes that will increase the costs, not enhance the experience and extend the useful life for a product that is already being used well beyond any planned obsolesce.
ESPR introduces a new framework to make electronic devices more sustainable. This law goes beyond energy efficiency by mandating durability, repairability, recyclability, transparency and extended software support for smartphones and tablets. The ESPR is within the EU’s broader aim to create a circular economy that reduces electronic waste while making sure consumers get access to devices that last longer and can be repaired. This regulation presents both operational challenges and strategic opportunities for smartphone manufacturers. Complying with it will require significant changes in how they design their products, manage the supply chain, and handle after-sales customer service. While initial costs may rise due to higher material standards and new repairability requirements, manufacturers that quickly adapt could boost their market position.
The Impact on Smartphone Manufacturers
One of the key pillars of the ESPR is durability. Smartphones that are replaced on a 3-4 year cycle and then are used for years by 2nd owners, will need to meet stricter requirements for resistance to drops, dust, and water ingress. Manufacturers will need to redesign their products, particularly when it comes to protecting from water ingression, the second-largest cause of damaged smartphones, increasing production costs, and possibly reducing warranty claims and lowering returns. Brands that embrace this shift early may gain a competitive edge by positioning their products as premium, long-lasting investments.
Battery performance
Smartphones will have to maintain at least 80% of their initial capacity after 800 charge cycles, pushing manufacturers to invest in higher-quality battery technology, adding cost in the hope for more energy-dense cells or modular battery designs. Additionally, the push for removable or easily replaceable batteries could reshape product engineering, affecting device thickness and aesthetics. While these changes add complexity to design processes, they could provide an opportunity to differentiate in a market where battery life remains a critical consumer concern.
Repairability
Under the new rules, smartphone manufacturers must ensure that critical spare parts, including batteries, screens, cameras, charging ports, and buttons, remain available for at least seven years after a product is discontinued. Additionally, these parts must be delivered within a maximum of 10 working days, ensuring timely repairs and reducing consumer reliance on device replacements. The legislation also requires new disassembly requirements, making it easier for professional repairers and, in some cases, consumers to replace damaged parts using basic tools. Manufacturers will be prevented from using proprietary designs or software locks that restrict third-party repairs—a common industry practice that has previously driven up repair costs and discouraged device longevity.
As consumers gain access to affordable repairs and extended product lifecycles, demand for manufacturer-backed refurbishment programs and trade-in services is likely to grow. IDC forecasts that trade-in used smartphone sales will grow on average 6.7% between 2023 and 2028 to reach $94 billion by 2028. Although PCs are not yet part of this legislation, last year at the Mobile World Congress, I witnessed brands moving beyond the traditional approach of simply incorporating recycled materials and reducing carbon footprints to a more strategic approach of repairability by design
Software upgrades are another crucial area. The ESPR mandates that operating system updates must be available for at least five years after a device is discontinued. This prevents premature obsolescence, addressing one of the most common reasons for smartphone replacements. However, it also presents challenges for manufacturers, particularly those dependent on frequent hardware-software upgrade cycles to drive sales. Companies will need to balance regulatory compliance with revenue strategies. While most brands already provide five-year upgrades on their flagship and premium devices, extending this to mid-range handsets will be particularly challenging for many smaller brands. The six-figure cost reported by some brands will make it impossible to continue offering mid to low-end devices long-term. This will compel them to reduce the number of devices in their portfolios and weaken their position against more prominent brands.
Strategic Implications for the Industry
The ESPR represents a fundamental shift in how the smartphone industry must approach product lifecycle management. Companies that fail to adapt will risk fines, supply chain disruptions, and reputational damage. However, those who proactively integrate sustainability into their core strategies can benefit in several ways.
Early adopters of the regulation can establish themselves as leaders in sustainability, gaining an advantage in a market increasingly influenced by environmental consciousness. With consumers becoming more selective about the sustainability credentials of their purchases, companies that highlight durability, repairability, and eco-friendly design can create strong differentiation.
Furthermore, regulatory alignment is crucial for market access. The EU remains one of the world’s largest and most lucrative consumer electronics markets. Brands that do not meet these new requirements could face import restrictions, compliance-related delays, or reputational setbacks, ultimately losing market share to more forward-thinking competitors. Supply chain optimization will also become a priority.
Such an approach could destroy the existing supply chain,where manufacturers depend on selling 1.2b new smartphones and 400m refurbished smartphones with devices that last forever and are repaired, reused, and resold. The EU is espousing a new economic model with the expectation that it would lead to new revenue streams in refurbished devices, leasing models, and extended warranty programs.
The Consumer and Sustainability Perspective
The EU justifies the ESPR ensuring smartphones last longer and can be easily repaired, the regulation reduces the financial burden of frequent device replacements. This is particularly relevant in an era of rising electronic prices, where consumers are looking for greater value from their purchases. Beyond cost savings, the regulation hopes it will addresses the growing e-waste crisis. The smartphone industry generates millions of discarded devices each year, with only a fraction (33%) being properly recycled. By mandating longer-lasting products, the ESPR directly contributes to waste reduction, minimizing the environmental footprint of smartphone production and disposal. This shift aligns with growing consumer demand for ethical and sustainable technology choices.
The EU claim for ESPR is that companies embracing these changes can build stronger, longer-lasting relationships with their customers while reinforcing their commitment to environmental responsibility.
Excellence in technology, which has taken the smartphone form a voice device with access to the internet to an integrated personal aid is missing from the legislation as is the prospective additional cost of meeting these non-functional demands. The first iPhone was introduced in 2007 and was priced at $499-$599 and went on sale on June 29. The CAGR of the product in 2024 is between 3% and 4%, a little higher than the target inflation rate, but display area is up by 4x, 3-4 higher resolution, cameras where added, transmission speeds are exponentially higher, processing speed is more than 10x faster, loads of software is available and now there is the potential of AI. Similar to a number of initiatives, the EU is trying to solve a problem that doesn’t exist by adding costs and no functionality, which in the long run hurts the consumer.
Barry Young has been a notable presence in the display world since 1997, when he helped grow DisplaySearch, a research firm that quickly became the go-to source for display market information. As one of the most influential analysts in the flat-panel display industry, Barry continued his impact after the NPD Group acquired DisplaySearch in 2005. He is the managing director of the OLED Association (OLED-A), an industry organization that aims to promote, market, and accelerate the development of OLED technology and products.
