AI is killing the cheap smartphone
The decline in affordable smartphones is attributed to a global memory shortage driven by the rising demand from AI technologies. In 2026, smartphone shipments are expected to drop significantly, particularly affecting the cheapest models and impacting poorer regions the most. This shift marks a structural change in the market, potentially leading to higher prices for consumer electronics worldwide.
- ▪Worldwide smartphone shipments are predicted to fall by 13 percent in 2026, the largest decline ever recorded.
- ▪The most significant impact will be felt in Africa and the Middle East, where shipments could decrease by over 20 percent.
- ▪The rising demand for memory from AI applications is reallocating resources away from consumer electronics, making smartphones more expensive to produce.
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AI is killing the cheap smartphoneThe global memory crunch and the great repricing of consumer electronicsDavid OksMay 21, 20262625ShareOne of the most remarkable things about the last few decades is how cheap computers have gotten.In 1985, if you were a reasonably affluent American, the best computer that you could afford was the IBM PC AT. The PC AT would cost you about $6,000—$19,400 in 2026 dollars—and thus represented about a quarter of the median American’s annual income; and it ran on an Intel 80286 processor, capable of something like 900,000 instructions per second. Today, if you find yourself in a market stall in Nairobi or Lagos, you’ll be able to find a cheap smartphone—like the Tecno Spark Go, manufactured by China’s Transsion—for somewhere between $30 and $120.
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