The AI boom is making the world’s cheapest smartphones disappear
Rest of World Kinling Lo
Cheap smartphones are vanishing as AI data centers soak up memory chips. The first hit is on low-income buyers, but the digital divide gets bigger for everyone.
Based on reporting by Rest of World, Kinling Lo — read the original for the full story.
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The cheapest smartphones are getting squeezed out by the AI boom. Memory chips that once fed low-cost phones are being pulled toward data centers, and the result is showing up fast: existing phone models are about 15% more expensive globally this year, while new launches are roughly 25% pricier than last year.
The sharpest pressure is on Chinese makers, which have built their business on affordable devices and ship about 60% of the world’s smartphones. Ivan Lam of Counterpoint said they have “drastically reduced” entry-level projects as chip costs rise, and are putting more effort into premium phones instead. That shift is already visible in the numbers. Xiaomi raised the Indian price of its Redmi 15C from 12,499 rupees in December to 16,999 rupees in June, a 36% jump.
The pattern is global, but not evenly global. Prices are up 21% in India, 19% across Asia-Pacific, and 18% in the Middle East and Africa. In the U.S., they’ve risen 5%. And the bottom of the market is shrinking the fastest: in Southeast Asia, Oppo’s sub-$100 shipments plunged 96%, while Vivo pushed its main entry-level model above $100 in most markets. In Africa, where 81% of smartphones shipped last year cost less than $200, sub-$100 shipments fell 34% year over year in the second quarter of 2026.
This is not just a consumer annoyance. For people still trying to buy their first smartphone, a higher entry price can mean no internet at all. GSMA says an entry-level device costs the poorest 20% the equivalent of 44% of monthly income, and 76% in sub-Saharan Africa. When the cheapest phones disappear, “affordable” becomes a moving target, and not in a charming way.
The supply problem also looks stubborn. Ramon Llamas of IDC said the three main memory makers shifted most of their supply toward AI centers in late 2025, leaving phone makers scrambling. Samsung Electronics, SK Hynix, and Micron control more than 90% of the memory chip market, and with AI data-center spending still climbing, there is no obvious reason for handset prices to snap back soon.
My take — AI-written commentary, not fact-checked reporting
This is the AI bill arriving at the checkout counter, and it’s being paid by people who never ordered the feast. Big tech gets its shiny infrastructure; everyone else gets a more expensive phone and a wider gap to the internet. That’s a neat trick if the goal is to make digital inclusion sound like a policy slogan instead of a device you can actually buy.
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