Rising Chip Costs Threaten Affordable Smartphones In Africa

The rising cost of memory chips, driven by growing demand from artificial intelligence (AI) data centres, is threatening the availability of affordable smartphones in Africa, raising concerns over the cost of digital access for millions of low-income consumers, including Nigerians.

Shipments of smartphones priced below $100 in Africa fell by 34 per cent year-on-year in the second quarter of 2026, according to research firm Omdia, as manufacturers grappled with rising component costs and tighter supplies.

The decline highlights the growing pressure on the entry-level smartphone segment, which remains critical to expanding internet access among consumers who cannot afford premium devices.

The development comes as technology companies increase investments in AI infrastructure, creating strong demand for specialised memory chips used in data centres and placing pressure on the supply of conventional memory components required for smartphones and other consumer electronics.

As chipmakers allocate more production capacity to higher-margin AI-related products, smartphone manufacturers are being forced to review pricing, reduce device specifications or scale back production of cheaper models.

According to industry reports, the cost of memory components has risen sharply, making it increasingly difficult for manufacturers to maintain previous price points for budget smartphones without sacrificing profitability.

The impact is particularly significant for Nigeria, where the cost of imported electronics, exchange-rate movements, shipping expenses and distribution costs already influence retail prices.

A report by The Condia, published earlier this month, found that prices of six smartphone models across Tecno, Infinix, Oppo and itel increased between January and June 2026, with price rises ranging from about seven per cent to more than 20 per cent.

The report noted that the increases occurred despite an improvement in the naira’s exchange rate during the period, pointing to mounting pressures across the global supply chain.

Similarly, Jumia’s chief executive, Francis Dufay, said consumers were adjusting to higher device prices by opting for lower specifications within their budgets.

For Nigerian consumers, the consequences could include paying more for entry-level devices, settling for less storage and memory, delaying phone replacements or turning to second-hand and refurbished handsets.

The pressure also presents a challenge to Nigeria’s digital inclusion efforts, as access to mobile internet depends not only on the availability of telecommunications networks but also on whether consumers can afford compatible devices.

The affordability question is particularly important as more government services, financial transactions, educational resources and commercial activities move online, increasing the need for reliable internet-enabled devices.

Globally, the outlook for smartphone manufacturers has also weakened. Preliminary estimates from Counterpoint Research showed that worldwide smartphone shipments fell by 20 per cent year-on-year in the third quarter of 2026, reaching their lowest level for the period since 2012, according to a Reuters report published on October 12.

The decline was attributed partly to rising memory-chip costs and supply shortages linked to demand from AI infrastructure projects, prompting manufacturers to reduce shipments and focus on more profitable models.

Meanwhile, financing schemes and refurbished devices could provide alternatives for consumers unable to pay higher prices upfront. However, financing introduces repayment obligations, while the quality and durability of used devices may vary.

Although the decline in shipments does not mean that all smartphones below $100 have disappeared from African markets, it underscores the growing difficulty of supplying devices at prices affordable to the continent’s lower-income consumers.

For Nigeria, the challenge is to ensure that rising global technology costs do not widen the gap between network availability and actual internet adoption. Without affordable smartphones, efforts to expand connectivity may struggle to translate into broader participation in the digital economy.