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

A push by a coalition of telecom operators, device makers, and industry groups to bring $40 smartphones to market — a price point seen as key to getting tens of millions more people online — is gathering momentum, but questions remain over whether manufacturers can produce such ultra-low-cost devices at scale.

This week at Mobile World Congress in Barcelona, the advocacy and lobbying group GSMA said 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, in a bid to make smartphones more affordable and bring an additional 20 million people online.

Affordable smartphones are widely seen as key to narrowing the digital divide in developing markets, where millions of people live within mobile broadband coverage but remain offline, often because internet-enabled devices remain too expensive. Through its Handset Affordability Coalition, the GSMA is working with operators and manufacturers to promote devices priced around $40 to help close that gap.

The initiative remains in early stages, with commercial negotiations underway between mobile operators and smartphone manufacturers to develop devices meeting the targeted price range.

The GSMA has engaged with more than 15 smartphone manufacturers as part of the effort, with seven companies expressing interest in supporting the initiative, Alix Jagueneau, the group’s head of external affairs, told 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,” Jagueneau said, adding that rising memory costs are adding urgency and complexity to the effort.

The final price of such devices will depend on a combination of factors, including financing schemes and tax policies, Jagueneau told TechCrunch. Development banks, donors, and other financial institutions could help reduce risks for mobile operators investing in the devices. At the same time, import duties and taxes on smartphones — sometimes treated as luxury items — can add as much as 30% to handset prices in some markets, Jagueneau said.

The GSMA has not confirmed which manufacturers will produce the devices, with Jagueneau saying commercial discussions with smartphone makers are still ongoing. However, the group hopes initial proof-of-concept devices could be produced this year, with early consumer offerings potentially reaching markets by late 2026.

None of the six countries identified for the pilot program has yet committed to reducing import duties or taxes on entry-level smartphones, Jagueneau said, adding that the group is working with operators to build an ongoing dialogue with governments in the coming months.

“We believe there is an urgency for the public sector to address this part of the equation for digital inclusion purposes,” Jagueneau said. She added that the group welcomed South Africa’s removal last year of a 9% luxury excise duty on smartphones priced below R2,500 (around $150), saying more countries should take similar steps.

Thin margins and rising component costs

Analysts say 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 come with extremely basic specifications and thin profit margins, Shehab told TechCrunch, adding that securing low-capacity memory components can also be difficult as suppliers increasingly prioritize higher-capacity chips.

The average selling price of smartphones in the Middle East and Africa, per Counterpoint, stood at about $188 in the fourth quarter of 2025, highlighting the gap between current market prices and the targeted $40 level.

“Although a few brands have achieved ASP levels below $40, these sales volumes remain negligible and are largely absent from major global vendors,” Shehab said.

Attempts to bring ultra-low-cost smartphones to emerging markets have faced challenges before. In 2014, Google launched the Android One initiative to promote affordable smartphones in markets including India, Pakistan, Bangladesh, and Indonesia before expanding the program to Africa in 2015. However, it struggled to achieve widespread adoption.

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

Jagueneau said the effort would require coordinated action across operators, manufacturers, and governments, but added that improving access to affordable smartphones remains critical to bringing more people online.