$40 smartphone push gains momentum but still faces cost hurdles

Efforts by a coalition of carriers, device makers and industry groups to bring $40 smartphones to market – a price point considered key to reaching tens of millions of people online – are gaining momentum, but questions remain about whether manufacturers will be able to produce such ultra-low-cost devices at scale.

At the Mobile World Congress in Barcelona this week, advocacy and lobbying organization GSMA announced that Airtel, Axian Telecom, Ethio Telecom, MTN Group, The company announced that it is working with major African mobile operators and smartphone manufacturers, including Orange and Vodafone, to pilot ultra-low-cost 4G devices in six African markets: Democratic Republic of the Congo, Ethiopia, Nigeria, Rwanda, Tanzania and Uganda. People online.

Affordable smartphones are widely considered to be the key to narrowing the digital divide in developing markets. Millions of people in developing markets live within mobile broadband coverage, but they often remain offline because internet-enabled devices remain too expensive. The GSMA is working with carriers and manufacturers through the Handset Affordability Coalition to promote devices priced around $40 to bridge that gap.

The initiative is still in its early stages, with commercial negotiations underway between mobile carriers and smartphone manufacturers to develop devices that meet target price points.

The GSMA is working with more than 15 smartphone manufacturers as part of the effort, and seven of them have expressed interest in supporting the initiative, Alix Jagnot, the group’s head of external affairs, told TechCrunch.

“The $30-$40 price range is ambitious based on GSMA intelligence research on affordability and should be understood as a best-effort intent,” Jagnot said, adding that rising memory costs add urgency and complexity to this effort.

Jagnot told TechCrunch that the final price of such a device will be determined by a combination of factors, including funding schemes and tax policy. Development banks, donors, and other financial institutions can help reduce risk for mobile operators investing in devices. At the same time, import duties and taxes on smartphones, which are sometimes treated as luxury goods, could increase the price of a phone by up to 30% in some markets, Jagnot said.

GSMA did not say which manufacturer would produce the device, but Jagnot said commercial negotiations with smartphone manufacturers were still ongoing. However, the group is hopeful that the first proof-of-concept devices could be manufactured this year and that early consumer products could be on the market by late 2026.

None of the six countries identified for the pilot program have yet committed to reducing import duties or taxes on entry-level smartphones, Jagnot said, adding that the group will work with carriers to build an ongoing dialogue with governments in the coming months.

“We believe that there is an urgent need for the public sector to address this area with the aim of digital inclusion,” Jagnot said. The group also welcomed South Africa’s decision last year to remove the 9% luxury goods tax on smartphones costing less than R2,500 (about $150) and said more countries should do the same.

Low profit margins and rising component costs

Analysts say that with the current component cost situation, the industry may struggle to produce smartphones at prices around $40.

“Historically, it may have been possible to launch a smartphone in the $30 to $40 range when memory costs were much lower,” said Ahmad Shehab, a research analyst at Counterpoint Research.

Shehab told TechCrunch that a device at that price would likely have very basic specs and low margins, adding that securing lower-capacity memory components could also be difficult as suppliers increasingly prioritize higher-capacity chips.

The average selling price of smartphones per Counterpoint in the Middle East and Africa was approximately $188 in Q4 2025, highlighting the gap between current market prices and the targeted $40 level.

“Although some brands are achieving ASP levels below $40, their sales volumes are still negligible and almost non-existent among major global vendors,” Shehab said.

Efforts to bring ultra-low-cost smartphones to emerging markets have faced challenges in the past. In 2014, Google launched the Android One initiative to popularize affordable smartphones in markets such as India, Pakistan, Bangladesh, and Indonesia, and expanded the program to Africa in 2015. However, it was difficult to spread widely.

Google continued this program in some markets, including Japan, for several years, but it never became the dominant platform for entry-level smartphones.

Jagnot said the effort requires coordinated action between carriers, manufacturers and governments, but added that improving access to affordable smartphones remains critical to getting more people online.