ARM believes that a $20 smartphone may arrive by the end of this year, and a $25 Firefox OS phone is already in the market, according to a report from Anand Tech, who covered the Tech Day hosted by ARM. The chip maker stated that it might not be possible to drop below $20 given current technology. The budget Android smartphone will run on a single-core cortex A5 processor and 2.5G wireless data. A single Cortex A5 is faster than the ARM11 in the original iPhone, which retailed for $599, in 2007.

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Low budget smartphone shipments to double

ARM’s Tech Day revealed a number of interesting facts regarding developments in the smartphone market. According to ARM, growth in the smartphone market will move from niche devices to mid-range and entry-level devices over the next year or two. ARM anticipates that by 2018 more than 1 billion entry-level smartphone would be shipped per year, which is more than twice the current rate. ARM also believes that the success of entry-level device depends upon their performance and their overall cost.

Separately, ARM revealed new performance estimates for its 64 bit Cortex A53 and A57 architecture. According to the company, the chip based on this architecture would be 1.5 times speedier than the Cortex A7 and A15. Also, with the newer 20nm or 16nm manufacturing process, A57 based chips are likely to be at least two times faster than the older A15.

Premium segment reaching saturation

The report also noted the high-end smartphone market is reaching a saturation level, which has triggered the need to exploit new segments where smartphone makers can drive their profitability.  Motorola was quick to identify the opportunity and launched Moto G, which is now the “best bargain of 2014”. Moto E is expected to be released later this year. Nokia also launched its low-end Model X before it was acquired by Microsoft Corporation (NASDAQ:MSFT). Though users in the developed markets may not be very interested in these low-priced phones, the machines will get great deal of attention in rest of the world. Price will play a key role because all these ultra-affordable smartphones can offer basic functionality.