Rising Chip Costs Threaten Affordable Smartphone Access

The gap between those who are online and those who are not is widening, not because of a lack of network coverage, but because of the price tag on the device itself. According to a new report from GN technics/mobile (en-US), 3.4 billion people remain offline despite living in areas with mobile broadband access. The primary driver of this exclusion is the skyrocketing cost of memory chips and processors, which are now being hoovered up by the global infrastructure for artificial intelligence.

For the poorest 20% of the population in low- and middle-income countries, the price of a basic entry-level smartphone can now consume up to 44% of their monthly income. In sub-Saharan Africa, this figure climbs to 76%. This financial barrier creates a profound digital divide, where the benefits of AI and modern connectivity are reserved for those who can afford the hardware, while others are left entirely outside the digital economy.

AI demand drives component prices

The root of the problem lies in the supply chain. The massive demand for data centers and AI infrastructure has caused a sharp spike in the cost of smartphone memory and chipsets. Between late 2025 and mid-2026, memory prices more than doubled, followed by an additional 80 to 90 percent increase. Manufacturers are passing these costs directly to consumers, resulting in a significant rise in the retail price of the most affordable devices.

This trend threatens to reverse years of progress in closing the mobile usage gap. As prices climb, the number of new users coming online is slowing down, with recent data showing a drop in new subscribers from 190 million to 160 million in a single year. The industry warns that this could lead to the largest annual decline in smartphone shipments on record, disproportionately affecting emerging markets where the demand for cheap, reliable devices is highest.

Industry calls for lower device costs

To combat this, the GSMA is urging manufacturers to reset the price point for entry-level phones to $30. At this price, devices would become affordable for approximately 1.6 billion people currently within network coverage. If the price could be pushed down to $20, the potential reach would expand to 2.2 billion individuals. This target is seen as a critical threshold for ensuring that basic digital inclusion is not a privilege reserved for the wealthy.

The organization is also pressing chipset and memory producers to prioritize the availability of affordable components for budget handsets. By securing a stable supply of low-cost parts, phone makers can maintain lower prices without sacrificing essential functionality. The goal is to ensure that the fundamental building blocks of a smartphone do not become too expensive for the majority of the global population to access.

Barriers beyond hardware affordability

Price is only one piece of the puzzle. The report highlights that other significant barriers to digital inclusion include low literacy rates, a lack of digital skills, and safety concerns. Furthermore, many users in emerging economies struggle to find content and services that are relevant to their local languages and needs. Addressing these issues requires a holistic approach that goes beyond just making the hardware cheaper.

The stakes are high as artificial intelligence promises to transform various sectors of life. However, these benefits are moot if a significant portion of the global population cannot access the internet in the first place. The industry faces a critical decision point: either act to keep devices affordable and inclusive, or risk creating a permanent digital underclass that is excluded from the next generation of technological advancements.