Rising Chip Costs Threaten Global Access to AI
A new report warns that soaring component prices are pushing affordable smartphones out of reach for billions, creating a permanent split in the digital economy.
The gap between those who can access artificial intelligence and those who cannot is widening due to rising hardware costs. The GSMA, an industry body representing the global mobile ecosystem, has issued a stark warning that over 3.4 billion people remain offline. This is not because they lack network coverage, but because the smartphones needed to connect have become too expensive for them to afford.
According to the State of Mobile Internet Connectivity Report 2026, more than 90 percent of these offline individuals already live in areas with mobile broadband coverage. The primary barrier is now the device itself. As the cost of memory and chipsets climbs, the price of entry-level handsets is rising, effectively locking the poorest populations out of the digital revolution before they have even started.
Memory Costs Drive Up Phone Prices
The driving force behind this price increase is the global surge in demand for AI infrastructure and data centers. This demand has pushed up the cost of essential components like memory and chipsets. These higher production costs are now being passed directly to consumers, specifically targeting the budget segment of the market. This shift jeopardizes years of progress in making mobile internet accessible to low-income users.
For the poorest 20 percent of people in low- and middle-income countries, an entry-level smartphone now costs the equivalent of 44 percent of their average monthly income. In Sub-Saharan Africa, this figure climbs to a staggering 76 percent. The GSMA notes that these costs are expected to surge further, making the trade-off between saving for food and buying a connection increasingly impossible.
Growth Stalls Amidst Affordability Crisis
The pace of digital inclusion is slowing down. While 4.8 billion people now access the internet, the number of new users added each year is dropping. In 2025, only 160 million people came online, down from 190 million the previous year. This stagnation highlights a critical usage gap, where 3.1 billion people sit within network range but remain disconnected due to a lack of affordable hardware.
Affordability is now the top obstacle to adoption, surpassing even digital skills as a barrier. The GSMA argues that without intervention, the world faces a permanent divide. This is not just a gap between rich and poor nations, but a chasm between those who can participate in the AI-driven economy and those who are excluded from it entirely.
Industry Call for Supply Solutions
Vivek Badrinath, Director General of the GSMA, stated that AI holds no value if people cannot first get online. He called on chipset and memory producers to take immediate action to boost the supply of affordable components. The organization urges these firms to engage with policymakers and financial institutions to find sustainable solutions for extending connectivity.
The report suggests that coordinated efforts are needed across the entire mobile ecosystem. This includes deploying tools in production, distribution, and taxation to lower costs. It also advocates for measures that facilitate device reuse. The goal is to safeguard the affordability of entry-level smartphones so that billions are not shut out of the next generation of digital services. As reported by GN technics/mobile (en-US), this is a clear and immediate threat that requires a unified response.
