Overview

• Smartphone gray market refers to devices smuggled into a country for resale, avoiding import duties. Such devices often lack a valid manufacturer's warranty in the destination country.
• Latin America’s smartphone gray market declined 4% in 2025, the second successive year of decline.
• Chinese manufacturers dominate this space in LATAM. Xiaomi holds a massive 67% share, followed by realme at 23%. While these two OEMs are trying to check this smuggling into Brazil, a new wave of brands entered the space in 2025.
• Brazil has been the primary destination in the continent for such smuggled smartphones over the last few years, driven by local manufacturing requirements and import taxes that can reach 105% (import duties + internal taxes). Consequently, these smartphones are often priced at nearly 50% less than identical models found in official channels. Although these units lack manufacturer warranties, the massive cost savings incentivize consumers to overlook the risks or ignore the product's origin entirely.
• Similar to Brazil, Argentina has historically struggled with a high volume of gray trade due to heavy taxation and local production mandates. The landscape changed during 2025 and 2026 when the government cut import duties by 16%. Although internal VAT still applies, this policy shift is likely to reduce the incentive for the gray market as official prices become more aligned with the global market.
• In terms of source countries, the US is the main trade source for Mexico, Central America and the Caribbean, while Panama acts as the "Central American Gateway" for distribution. The total economic impact of this smartphone gray market exceeds $1 billion per year and is a key area of concern for players in the ecosystem looking to scale in the region.
• Analyst take by Principal Analyst Tina Lu: Latin America's smartphone gray market is entering a period of correction. The 4% decline in 2025 indicates that the aggressive unofficial trade is giving way to a more mature landscape, with official retail networks gaining strength, and leading OEMs curbing the gray trade.

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