Push for $40 smartphones builds momentum, but still faces cost hurdles

Source: TechCrunch

GSMA & the $40 smartphone pilot

The advocacy and lobbying group GSMA announced that it is working with major African mobile operators — including Airtel, Axian Telecom, Ethio Telecom, MTN Group, Orange, and Vodafone — and smartphone makers to pilot ultra‑low‑cost 4G devices in six African markets: the Democratic Republic of the Congo, Ethiopia, Nigeria, Rwanda, Tanzania, and Uganda. The goal is to make smartphones more affordable and bring an additional 20 million people online.

Through its Handset Affordability Coalition, the GSMA is promoting devices priced around $40 to help close the digital divide in developing markets, where many users have mobile broadband coverage but remain offline because devices are too expensive.

• The GSMA has engaged with more than 15 smartphone manufacturers; seven have expressed interest in supporting the initiative (as reported by TechCrunch).
• “The $30–$40 price point is an ambition, based on GSMA intelligence research on affordability and is to be understood as a best‑effort intent,” said Alix Jagueneau, head of external affairs.
• The final price will depend on financing schemes, tax policies, and import duties. In some markets, duties can add up to 30 % to handset prices.
• Development banks, donors, and other financial institutions could help reduce risks for mobile operators investing in the devices.

The GSMA has not confirmed which manufacturers will produce the devices, but hopes proof‑of‑concept models could be produced this year, with early consumer offerings potentially reaching markets by late 2026. None of the six pilot countries has yet committed to reducing import duties or taxes on entry‑level smartphones, and the group is working with operators to open dialogue with governments.

“We believe there is an urgency for the public sector to address this part of the equation for digital inclusion purposes,” Jagueneau said, citing South Africa’s removal of a 9 % luxury excise duty on smartphones priced below R2,500 (≈ $150) as a positive example.

Thin margins and rising component costs

Analysts warn that the industry may struggle to produce smartphones near the $40 price point under current component cost conditions.

• “Pushing smartphones priced in the $30–$40 range could have been historically feasible when memory costs were significantly lower,” said Ahmad Shehab, research analyst at Counterpoint Research.
• Devices at that price would likely have extremely basic specifications and thin profit margins. Securing low‑capacity memory components is becoming difficult as suppliers prioritize higher‑capacity chips.
• The average selling price of smartphones in the Middle East and Africa was about $188 in Q4 2025, highlighting the gap between current market prices and the targeted $40 level.
• Although a few brands have achieved ASPs below $40, their sales volumes remain negligible and are largely absent from major global vendors.

Lessons from past low‑cost initiatives

In 2014, Google launched the Android One initiative to promote affordable smartphones in India, Pakistan, Bangladesh, and Indonesia, later expanding to Africa in 2015. The program struggled to achieve widespread adoption, and while it continued in some markets (e.g., Japan) for several years, it never became a dominant platform for entry‑level smartphones.

“The effort will require coordinated action across operators, manufacturers, and governments,” Jagueneau emphasized, adding that improving access to affordable smartphones remains critical to bringing more people online.