How AI Data Centres Are Making Cheap Smartphones Harder to Afford

AI’s demand for memory is raising the cost of making smartphones just as affordability remains a major barrier to getting online. The pressure is greatest at the bottom of the market: IDC forecasts a steep fall in global handset shipments in 2026, while the GSMA warns that higher component costs are already feeding into entry-level phone prices. 248

Why AI demand raises phone costs

AI infrastructure needs high-performance memory. As chipmakers prioritize higher-value products for those systems, supplies of conventional memory used in consumer devices have tightened. Counterpoint Research figures cited in reporting on the GSMA’s findings show memory prices more than doubled between the third quarter of 2025 and the first quarter of 2026, then rose a further 80–90% in the second quarter. Those are component-price changes, not equivalent increases in retail phone prices. 25

A more expensive component is especially difficult to absorb in a low-priced handset. Counterpoint identified phones below $200 as the segment most severely affected by rising parts costs; IDC says memory now accounts for more than 65% of the bill of materials at the low end. Manufacturers must either accept thinner margins, change the device or charge more. 21

What shipment forecasts do—and do not—say

IDC’s August 2026 forecast projected a 16.7% decline in worldwide smartphone shipments that year, to just over 1 billion units. The cheapest tier was already contracting: IDC data reported by CNBC showed shipments of phones priced below $100 fell almost 60% year on year in the second quarter of 2026. The sub-$100 result is an observation for one price tier and quarter, not a forecast for every phone below $200. 2422

The outlook is not a numerical prediction for 2030. IDC expects memory prices to keep rising until at least 2028, but the supplied forecasts do not establish how many smartphones will ship globally in 2030—or how many people will remain offline because of memory costs. 24

Why the squeeze matters in sub-Saharan Africa

At the end of 2025, an entry-level internet-enabled handset cost the poorest fifth of people in sub-Saharan Africa the equivalent of 76% of their average monthly income, according to figures reported from the GSMA. Higher handset prices could therefore delay adoption even where mobile broadband coverage exists. The GSMA identifies affordability as the biggest barrier to mobile internet adoption across the low- and middle-income countries it surveyed. 48

The cost shock also threatens attempts to offer much cheaper devices. In March 2026, the GSMA identified six African countries for affordable 4G smartphone pilots and warned that rising memory prices were making their $30–$40 target difficult to achieve. A separate GSMA simulation suggests that a $20 internet-enabled device could make connectivity financially accessible to another 230 million people in sub-Saharan Africa; that is a modeled affordability gain, not a forecast that all 230 million would get online. 152

Manufacturers’ choices and the 2030 ambition

Manufacturers are responding by redesigning products and passing on costs, while smaller phone and laptop makers told Reuters they expect memory scarcity to persist through 2027. IDC says vendors are adapting their portfolios to higher costs. Those choices may keep products viable, but they offer little assurance that new phones at the lowest prices will remain widely available. 1721

The GSMA and its partners aim to connect one billion people in Africa to the internet by 2030. More expensive phones make that ambition harder, but memory prices alone cannot determine its outcome. The GSMA has also called for removing taxes and duties on low-cost devices, while its research emphasizes the need to turn existing network coverage into actual use. The defensible conclusion is a heightened affordability risk—not a precise forecast of how far Africa will be from its goal in 2030. 131