Demand from artificial-intelligence data centers is reshaping the smartphone supply chain, making the least expensive internet-capable handsets scarcer in markets where affordability matters most. Memory producers have directed more capacity toward AI infrastructure, tightening supplies for consumer electronics and raising the cost of building phones.
The effect is showing up in both prices and product plans. Existing smartphone models cost about 15% more globally this year, while newly introduced devices are roughly 25% more expensive than comparable launches last year, according to figures reported by Rest of World. Chinese manufacturers, which account for about 60% of global smartphone shipments, have sharply reduced entry-level projects and shifted resources toward premium devices with better margins.
The change is uneven across regions. Smartphone prices have risen 21% in India, 19% across Asia-Pacific and 18% in the Middle East and Africa, compared with 5% in the United States. Xiaomi's 128GB Redmi 15C, for example, rose from 12,499 rupees at its December launch to 16,999 rupees in June. In Southeast Asia, shipments of Oppo phones priced below $100 fell 96%, while Vivo moved its main entry model above that threshold in most markets.
The global retreat at the bottom of the market is especially pronounced. IDC data cited in the report show that shipments of sub-$100 smartphones fell almost 60% year over year in the second quarter of 2026. In Africa, where 81% of smartphones shipped last year cost less than $200, shipments below $100 declined 34% in the same quarter. More than one in four phones shipped worldwide in 2025 had cost less than $150.
Industry concentration adds pressure. Samsung Electronics, SK Hynix and Micron Technology collectively produce more than 90% of memory chips. Researchers said the three suppliers redirected much of their output toward AI data centers in late 2025, leaving device makers competing for reduced inventories. The resulting component costs are being passed to buyers, and analysts do not expect a quick return to prices seen before 2025.
For consumers, this is more than an upgrade-cycle problem. GSMA estimates that an entry-level device already costs the poorest fifth of consumers the equivalent of 44% of monthly income worldwide and 76% in sub-Saharan Africa. Its foundation warns that people priced out may keep damaged or outdated phones longer, share devices, remain on feature phones or lose internet access entirely.
That threatens forecasts for expanding connectivity. GSMA had expected nearly 800 million additional people to use mobile internet by 2030, but rising handset costs could slow that progress. AI services may reach more sectors, yet the hardware needed to access them is moving beyond the budgets of many first-time smartphone buyers.
