By Chinenye Anuforo
chinenyeanuforo@gmail.com
Nigeria’s smartphone market contracted by 11 per cent in the second quarter of 2026 as rising device prices, driven partly by soaring memory chip costs linked to the artificial intelligence (AI) boom, weakened consumer demand and forced some buyers to delay purchases.
The decline, reported by global technology research firm, Omdia, highlighted the pressure on the country’s smartphone market, where affordable devices remain critical to expanding internet access and connecting millions of people to the digital economy.
The downturn comes as manufacturers contend with rising memory costs and supply constraints, with AI data centres absorbing increasing quantities of advanced memory components and reshaping the global semiconductor supply chain.
The impact is particularly severe in the entry-level segment. Across Africa, shipments of smartphones priced below $100 fell by 34 per cent year-on-year in the second quarter, according to Omdia.
The research firm attributed the contraction to rising memory costs and supply-chain changes linked to growing AI demand, which are making it increasingly difficult for manufacturers to produce ultra-cheap smartphones profitably.
For Nigeria, the pressure is already visible in retail prices. A market assessment published by technology news platform Condia in October found that prices of six smartphone models across Tecno, Infinix, Oppo and itel increased between January and June 2026, with price movements ranging from approximately seven per cent to more than 20 per cent.
The increases occurred despite a strengthening of the naira against the dollar during the period, suggesting that foreign exchange movements alone did not explain the rising cost of devices.
For instance, the price of the itel S-Series Ultra rose from a midpoint of about N263,500 in January to N316,400 in June, representing an increase of approximately 20 per cent.
The midpoint price of the Infinix Zero Series also increased from about N550,000 to N637,500 over the same period.
The findings point to mounting pressure on consumers who depend on relatively affordable Android devices for internet access, mobile banking, digital payments, online learning and business transactions.
Industry analysts have warned that smartphone prices could rise further as manufacturers pass higher component costs to consumers.
In June, Omdia warned that Nigerian smartphone prices could increase by another 15 to 30 per cent through the remainder of 2026, particularly in the mass-market segment, if component and memory costs continued to rise.
The rising cost of devices also threatens to reverse some of the gains made in expanding smartphone adoption, especially among low-income earners and first-time internet users.
The pressure on smartphone prices reflects a broader shift in the global technology industry, where demand for AI computing infrastructure is competing for semiconductor manufacturing capacity and memory supplies.
AI data centres require substantial quantities of advanced memory, including high-bandwidth memory used alongside AI accelerators. As semiconductor manufacturers prioritise higher-value components and applications, conventional memory used in smartphones and other consumer electronics is also facing supply and pricing pressures.
The resulting increase in production costs is particularly difficult for manufacturers of entry-level smartphones, which typically operate on thinner margins than premium devices.
Omdia’s Principal Analyst, Manish Pravinkumar, said the economics of producing ultra-cheap smartphones were becoming increasingly challenging.
The firm’s August assessment found that average smartphone selling prices in Africa had increased by $41 year-on-year to $202 in the second quarter of 2026, reflecting both a shift towards more expensive devices and price increases within individual market segments.
The trend is also affecting major manufacturers with significant exposure to the affordable-phone segment.
Transsion, whose brands include Tecno, Infinix and itel, recorded a 14 per cent decline in shipments across Africa during the second quarter, according to Omdia, as the contraction in the sub-$100 category weighed on its performance.
Although the figures cover the wider African market rather than Nigeria alone, they underline the challenges facing manufacturers that depend heavily on budget-conscious consumers.
For Nigerian buyers, the consequences could include paying more for a new device, settling for lower specifications or keeping an existing phone for longer.
Some consumers may also turn to refurbished devices or instalment-payment arrangements to spread the cost of acquiring a smartphone.
However, these alternatives come with their own challenges, including repayment obligations, concerns about device quality and the risk of purchasing phones with hidden defects.
The rising cost of smartphones presents a challenge for Nigeria’s digital inclusion ambitions, particularly as the country seeks to bring more people online through wider broadband access and affordable internet-enabled devices.
The GSMA’s smartphone adoption report found that only 27 per cent of Nigeria’s population owned a smartphone in 2024, while the country’s mobile internet usage gap remained close to 60 per cent.
The report identified smartphone affordability and availability as important barriers to wider adoption, even as mobile network coverage has expanded.
This means that extending network coverage alone may not be sufficient to connect people who cannot afford devices capable of accessing mobile broadband services.
The Nigerian Communications Commission (NCC) has acknowledged the affordability challenge. In April 2026, its Executive Vice Chairman, Aminu Maida, said the commission was exploring ways to make cheaper smartphones available in the country.
Nigeria was also selected as one of six African countries for pilot initiatives coordinated by the GSMA’s Handset Affordability Coalition to expand access to affordable 4G smartphones.
The initiative brings together telecommunications operators and device manufacturers to explore ways of widening access to entry-level smartphones, with government support expected to play a role.
However, these affordability efforts are unfolding against a difficult global supply-chain backdrop, as rising memory costs threaten to push the prices of some devices further beyond the reach of low-income consumers.
For the country, the stakes extend beyond smartphone sales. Affordable devices are increasingly essential for accessing financial services, digital education, e-commerce, employment opportunities and government services.
If prices continue rising while shipments weaken, more Nigerians could find themselves unable to afford the devices needed to participate fully in the digital economy.
The challenge for manufacturers, telecom operators and policymakers will be to ensure that the global AI boom does not make basic digital connectivity increasingly unaffordable for the consumers who need it most.
The post AI boom, rising chip costs shrink Nigeria’s smartphone market by 11% appeared first on The Sun Nigeria.