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AI Boom Drives Up Smartphone Prices, Threatens Digital Inclusion

The global surge in demand for AI infrastructure is causing a memory chip shortage, increasing smartphone prices and eliminating affordable models. This trend threatens digital inclusion, especially for lower-income populations.

Smartphone prices have risen globally, with new models 25% more expensive. A memory chip shortage, driven by AI data centers, is the cause. Chinese manufacturers are reducing entry-level phones and focusing on premium devices.

Price hikes vary by region, with India seeing a 21% increase. This rise could widen the digital divide, making internet access harder for many.

The GSMA is concerned rising costs will impact mobile internet usage projections and digital inequality, stressing phone access is crucial for AI services.

The market for smartphones under $150 is shrinking. Companies like Xiaomi and Oppo are shifting resources from these devices to higher-margin phones and AI features.

Xiaomi increased a model's price in India by 36%. Oppo's sub-$100 phone shipments dropped 96% in Southeast Asia. Sub-$100 phone shipments in Africa fell 34%.

The memory chip shortage is expected to persist as manufacturers prioritize AI centers. Samsung, SK Hynix, and Micron dominate the market and partner with U.S. AI giants.

Rising smartphone costs are a barrier for lower-income groups. An entry-level device is a large portion of their income, and price increases may force them offline.

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