Africa’s cheapest smartphones are disappearing as AI demand drives up chip costs

Africa’s smartphone market faces mounting pressure as rising memory chip costs, driven by demand from the artificial intelligence (AI) industry, push up handset prices and threaten the availability of devices costing less than $100.

Shipments of sub-$100 smartphones in Africa fell by 34 percent year-on-year in the second quarter of 2026, according to market research firm Omdia. The decline highlights the growing challenge of keeping smartphones affordable in a region where low-cost devices remain critical to expanding internet access.

The pressure comes as smartphone manufacturers contend with rising storage costs and limited component supplies, forcing them to increase prices, reduce specifications or discontinue budget-focused models. With manufacturers allocating scarce chips and memory to higher-margin premium devices, the cheapest smartphones are becoming increasingly difficult to produce profitably.

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For Sub-Saharan Africa, the implications extend beyond the mobile phone industry. Rising device prices could deepen existing affordability barriers and make it harder for millions of people to access mobile internet, even where broadband networks are available.

The development also threatens to complicate the Global System for Mobile Communications Association’s (GSMA) projection that nearly 800 million additional people will use mobile internet by 2030.

Rising costs reshape the smartphone market

The pressure on Africa’s cheapest smartphones reflects a broader downturn in the global handset industry, where manufacturers are facing higher component costs and declining shipment forecasts.

International Data Corporation (IDC) had earlier projected global smartphone shipments to decline by 13.9 percent in 2026. Omdia forecast a 12.2 percent year-on-year contraction, representing a fall of 153 million units from 1.246 billion units in 2025 to 1.093 billion units this year.

Existing smartphone models have become almost 15 percent more expensive globally in 2026, while newly launched models cost roughly 25 percent more than those launched a year earlier.

Memory costs have been a major contributor to the pressure. IDC research director Nabila Popal said memory costs had surged approximately 350 percent since the previous year and were still rising, putting pressure on manufacturers’ margins and shipments.

“Current indicators suggest that the market has not yet reached the bottom,” Popal said, warning that the worst effects could still lie ahead.

The increase in component costs is affecting manufacturers’ decisions about pricing and production. Budget smartphones typically operate within tighter margins, leaving manufacturers with less room to absorb higher costs without raising prices or cutting specifications.

As a result, manufacturers are directing limited microchips and memory towards premium devices that offer higher margins, putting additional pressure on the supply of entry-level models.

Xiaomi and Oppo took some of the hardest hits among leading smartphone brands in the global market, according to the IDC findings, while Apple and Samsung Electronics fared better because of their larger premium handset inventories.

The pressure is also evident in pricing decisions. Xiaomi raised the price of its 128GB Redmi 15C from $140 at launch in December 2025 to $190 seven months later in India, an increase of approximately 36 percent.

In Southeast Asia, shipments of Oppo’s smartphones priced below $100 surged by 96 percent, according to Omdia, while Vivo increased the price of its main entry-level model above $100 in most markets.

These developments illustrate the pressures facing the budget segment, although the impact differs across manufacturers and markets.

IDC’s projections indicate that the global smartphone market is not expected to return to growth until at least 2028, suggesting that manufacturers and consumers could face a prolonged period of uncertainty.

Africa’s digital inclusion ambitions face an affordability challenge

The pressure on entry-level smartphones is particularly significant for Africa, where cheaper devices account for a substantial share of the market.

About 81 percent of smartphones shipped in Africa in 2025 cost less than $200. This shows the importance of lower-priced devices to the region’s smartphone market and highlights the potential consequences of sustained price increases.

The GSMA has projected that nearly 800 million additional people will use mobile internet by 2030. However, the cost of smartphones remains a major obstacle to achieving wider adoption.

GSMA data show that about 76 percent of the population in Sub-Saharan Africa does not own a smartphone, while only approximately 24 to 25 percent uses mobile internet.

The region also faces a substantial gap between mobile broadband coverage and actual internet use. Reports showed that about 60 percent of people in Sub-Saharan Africa live within the range of a 3G or 4G network but do not use mobile internet, representing roughly 710 million people.

The figures underline the difference between providing network coverage and enabling people to use that infrastructure. Even where mobile broadband is available, consumers still need compatible devices they can afford.

The affordability burden is particularly severe for lower-income earners. According to the supplied figures, an entry-level smartphone can cost between 73 percent and 95 percent of an average or low-income earner’s monthly wage in the region. For the poorest 20 percent of earners, the cost can reach 99 percent of monthly income.

Rising handset prices could therefore make it more difficult for people without smartphones to acquire their first devices, while increasing the cost of replacing phones for existing users.

The consequences could affect access to online services and opportunities that increasingly depend on internet connectivity. However, the extent to which higher smartphone prices will affect the GSMA’s 2030 projection remains uncertain.

Manufacturers prioritise higher-margin devices

The shift towards premium smartphones is another indication of how rising component costs are reshaping the market.

Reports showed that shipments of 5G smartphones increased by eight percent year-on-year across the Middle East and Africa in the second quarter of 2026, even as shipments of sub-$100 smartphones in Africa declined by 34 percent.

The contrasting figures point to different trends across smartphone price segments. While 5G shipments recorded growth across the wider Middle East and Africa region, the cheapest smartphone category in Africa experienced a significant decline.

Manufacturers’ preference for higher-margin devices could further constrain the supply of budget phones if memory costs continue rising.

For consumers, this could mean paying more for new devices, settling for lower specifications or turning to alternatives in the second-hand market.

The available figures do not establish that all sub-$100 smartphones have disappeared from African markets. They do, however, show a decline in shipments and increasing pressure on the economics of producing the cheapest devices.

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Financing and refurbished phones offer alternatives

As new smartphones become more expensive, consumers who cannot afford to pay upfront may turn to buy-now-pay-later arrangements, device-financing schemes such as those offered by M-KOPA, or refurbished phones.

These alternatives could help some consumers obtain devices without paying the full purchase price immediately. However, there is no available data that showed how many African consumers have switched to these options or how much demand for financing and refurbished devices has increased as a result of the price pressure.

The alternatives also do not remove the underlying affordability challenge. Financing requires consumers to meet repayment obligations, while the cost and condition of refurbished devices can vary.

The central issue remains whether manufacturers can continue supplying smartphones at prices compatible with the purchasing power of lower-income consumers.

With smartphone prices rising and shipments of the cheapest devices declining, Africa’s digital inclusion ambitions face an additional challenge. Expanding mobile broadband networks alone will not be sufficient if the people those networks are intended to serve cannot afford the devices required to use them.

As memory costs continue to pressure manufacturers, the availability and affordability of entry-level smartphones will remain important to the region’s ability to expand mobile internet adoption.