AI data centers are consuming memory-chip capacity, pushing smartphone prices higher and forcing manufacturers to scale back affordable devices, threatening mobile internet access across developing markets.
WEBDESK – MEDIABITES
The global boom in artificial intelligence is creating an unexpected casualty: the affordable smartphone.
Growing demand for memory chips used in AI data centers is squeezing supplies available to smartphone manufacturers, driving up component costs and forcing some companies to rethink their cheapest devices. Recent industry research shows that the pressure is already visible in prices, product launches and shipments across major emerging markets.
Memory manufacturers including Samsung Electronics, SK Hynix and Micron are directing more production capacity toward high-bandwidth memory (HBM) and other components needed for AI infrastructure. Samsung said HBM could account for nearly 30% of industry DRAM wafer capacity next year, compared with about 20% currently, potentially limiting the supply of conventional DRAM used in consumer electronics.
TrendForce reported in February that memory prices were putting significant pressure on smartphone production, forecasting a 10% year-over-year decline in global smartphone output in 2026. It estimated that contract prices for an 8GB-plus-256GB memory configuration had nearly tripled year over year in the first quarter.
The impact is particularly severe at the low end of the market.
According to Rest of World, existing smartphone models have become about 15% more expensive globally this year, while newly launched models are roughly 25% more expensive than a year earlier. Chinese manufacturers, which account for around 60% of global smartphone shipments, have sharply reduced entry-level projects as memory costs rise.
In Southeast Asia, the shift is especially striking. Omdia reported that Oppo’s shipments of smartphones priced below $100 plunged 96% in the second quarter of 2026. Xiaomi’s sub-$100 shipments fell 69%, while Vivo’s declined 88% as manufacturers moved toward higher-priced models. Omdia
India is also experiencing substantial price pressure. Industry data showed average smartphone prices in the country increased 16% in the first half of 2026, while phones priced below 10,000 Indian rupees saw prices rise 32% and shipments fall 65% year over year.
Africa offers perhaps the clearest picture of what is at stake. Omdia said smartphone shipments across the continent fell 7% year over year in the second quarter, while shipments of devices priced below $100 dropped 34%, representing nearly 3 million fewer units.
That matters because affordable phones are not simply consumer products in many developing economies. They are often the primary gateway to mobile banking, education, commerce, government services and the internet.
The GSMA’s 2026 State of Mobile Internet Connectivity report found that handset affordability is the biggest barrier to mobile internet adoption across surveyed low- and middle-income countries. By the end of 2025, an entry-level internet-enabled handset cost the poorest 20% of people in those countries the equivalent of 44% of their average monthly income. In sub-Saharan Africa, the figure rose to 76%.
The GSMA also warned that memory prices more than doubled between the third quarter of 2025 and the first quarter of 2026, then rose another 80% to 90% in the second quarter.
The result could be a widening digital divide. As manufacturers concentrate on premium devices that can better absorb higher component costs, consumers with limited purchasing power may be pushed toward older phones, refurbished devices, or feature phones.
For the smartphone industry, the AI boom represents a powerful source of growth. For consumers who depend on inexpensive handsets to get online, however, the same boom is making basic connectivity increasingly difficult to afford.
