Gray-handset market in Asia-Pacific will decline to 103 million units in 2013 and 53 million units by 2017.
Reduction in gray-mobile handset market is due to an accelerated decrease in the sales of lower-end handsets known as feature phones.
Market research agency IHS says China is the largest gray-handset market in the world.
These devices — counterfeit products like fake iPhones as well as white-box cellphones — have strong presence in India, Vietnam, Thailand, Pakistan, Indonesia and the Philippines.
The Middle East and Africa in 2012 surpassed Central and Latin America as the second-largest gray handset market, driven by increasing demand from countries such as Nigeria, Turkey, Egypt and Iran.
Gray-market handset shipments this year to the Middle East and Africa will decrease slightly to 38.2 million units.
Central and Latin America together represented the third-largest gray-handset market, with 37.3 million units forecast to be shipped in 2013.
Countries in Eastern Europe, such as Russia and Ukraine, also are major target markets.
Globally, the gray market for cellphones will contract by 12 percent to 194.6 million units this year as both makers and buyers of these handsets turn to branded products.
Shipments reached their peak in 2011 with a total of 250.4 million gray-market cellphones.
The shipments of gray-market cellphones will be 173.8 million units in 2014. In 2017, there will be 133.9 million units.
While the ultra-low cost handset (ULCH) and smartphone segments of the gray market will continue to grow until 2014, expansion in these segments won’t be enough to counteract the drop in the feature phone sector.