Rising Chip Costs Threaten Smartphone Access in Poorer Nations

The global mobile industry is facing a critical affordability crisis that could deepen the digital divide. According to a new report from the GSMA, over 3.4 billion people remain offline not because they lack network coverage, but because they cannot afford the devices needed to connect. This creates a growing gap between those who can access modern digital tools and those who are shut out entirely.

The primary driver of this shift is a sharp increase in the cost of smartphone memory and chipsets. As manufacturers prioritize high-demand components for artificial intelligence data centers, the supply and pricing for standard mobile parts have become volatile. This economic pressure is hitting entry-level markets hardest, where consumers rely on low-cost handsets to access their first internet connection.

Component Prices Surge Amid AI Demand

Data cited in the report indicates that memory prices more than doubled between late 2025 and early 2026, with further increases of 80 to 90 percent expected later this year. This spike is directly tied to semiconductor producers shifting capacity toward AI infrastructure. For consumers in low- and middle-income countries, this means the baseline cost of an internet-enabled phone is rising rapidly, eroding the affordability that has historically driven mobile adoption.

The financial impact is severe for the poorest segments of the population. By the end of 2025, a basic smartphone cost the lowest income group in these regions the equivalent of 44 percent of their monthly income. In Sub-Saharan Africa, this figure reaches 76 percent. As prices climb, the sub-$100 handset segment, which serves as a gateway to the internet for many, is collapsing, leading to a forecast of the largest annual decline in global smartphone shipments on record.

Digital Exclusion Risks Widening Globally

The GSMA argues that this trend poses a threat to global digital inclusion. With 90 percent of these unconnected individuals living within network coverage, the barrier is purely economic. If entry-level devices become too expensive, billions of people will miss out on the benefits of the AI revolution. The association warns that the divide is not just between countries, but between individuals who can participate in the digital economy and those who cannot.

Growth in mobile internet users is already slowing, with only 160 million new users added in 2025 compared to 190 million the previous year. Handset affordability is now the top barrier to adoption, surpassing a lack of digital skills. The industry is urging chipset manufacturers to increase the availability of affordable components and is calling for dialogue with policymakers and financial institutions to address this structural issue.

Industry Calls for Supply Chain Action

The report emphasizes that protecting the affordability of entry-level smartphones is essential to prevent a permanent exclusion from digital services. The GSMA is pressing hardware suppliers to balance the high-margin AI sector with the needs of the mass market. Without intervention, the current trajectory risks leaving a significant portion of the global population disconnected, undermining the potential of mobile technology to drive social and economic development.

This situation highlights a trade-off in the current tech economy: the push for advanced AI capabilities is inadvertently driving up the cost of basic connectivity. As the market adapts, the focus must shift back to ensuring that the fundamental right to connect remains accessible to all, regardless of their income level or geographic location.