The push for $40 smartphones is building momentum, but still faces cost hurdles

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 of people online — is gaining momentum, but questions remain about whether manufacturers will be able to produce such ultra-low-cost devices at scale.

This week at Mobile World Congress in Barcelona, the advocacy and lobby group GSMA said it is working with major African mobile operators — including Airtel, Asian Telecom, Ethio Telecom, MTN Group, Orange and Vodafone — and smartphone makers to trial ultra-low-cost 4G devices in six African markets: the Democratic Republic of the Congo, Ethiopia, Nigeria, Rwanda, Tanzania and Uganda, in an effort to make smartphones Affordable and bringing 20 million more 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 the Phone Affordability Alliance, the GSMA is working with operators and manufacturers to promote devices priced around $40 to help close this gap.

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

The GSMA has teamed up with more than 15 smartphone manufacturers as part of the effort, with seven companies expressing interest in supporting the initiative, Alex Gagwino, the group’s head of external affairs, told TechCrunch.

“The $30 to $40 price point is aspirational, based on GSMA intelligence research on affordability and should be understood as a best-effort goal,” Gagueno said, adding that rising memory costs increase the urgency and complexity of the effort.

The final price of these devices will depend on a range of factors, including financing plans and tax policies, Gagweno told TechCrunch. Development banks, donors and other financial institutions can help reduce the risks faced by mobile network operators who invest in devices. Meanwhile, import duties and taxes on smartphones — sometimes treated as luxury items — can add up to 30% to phone prices in some markets, Gagueno said.

The GSMA has not confirmed which manufacturers will produce the devices, with Jagueneau saying that commercial discussions with smartphone makers are still ongoing. However, the group hopes to have prototype proof-of-concept devices produced this year, with early consumer demos potentially hitting 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, Gagueno 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 urgent need for the public sector to address this part of the equation for digital inclusion purposes,” Gagueno said. She added that the group welcomed South Africa’s removal last year of a 9% luxury excise tax on smartphones priced below 2,500 rand (about $150), saying more countries should take similar steps.

Thin margins and high component costs

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

“Historically it was possible to pay $30-$40 smartphone prices when memory costs were much lower,” said Ahmed Shehab, research analyst at Counterpoint Research.

Devices at this price will likely come with very basic specifications and slim profit margins, Shehab told TechCrunch, adding that securing low-capacity memory components may also be difficult as suppliers increasingly prioritize higher-capacity chips.

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

“Although some brands have achieved ASP levels below $40, these sales volumes remain small and 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 has 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.

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