Momentum grows for ultra-low-cost $40 smartphones, but cost barriers remain

A campaign led by a coalition of telecom operators, handset manufacturers, and industry organisations to bring $40 smartphones to market — a pricing threshold viewed as crucial for connecting tens of millions of additional people to the internet — is gaining traction. Even so, doubts remain about whether manufacturers can actually build such ultra-low-cost devices at scale.

At Mobile World Congress in Barcelona this week, the GSMA, the industry’s advocacy and lobbying body, said it is working with major African mobile operators — including Airtel, Axian Telecom, Ethio Telecom, MTN Group, Orange, and Vodafone — along with smartphone makers to test ultra-low-cost 4G devices in six African countries: the Democratic Republic of the Congo, Ethiopia, Nigeria, Rwanda, Tanzania, and Uganda. The goal is to make smartphones more affordable and help bring another 20 million people online.

Low-cost smartphones are widely considered essential to narrowing the digital divide in developing economies, where millions of people live in areas covered by mobile broadband networks but remain offline, often because internet-capable devices are too expensive. Through its Handset Affordability Coalition, the GSMA is working with operators and manufacturers to encourage devices priced at roughly $40 to help close the gap.

The project is still at an early stage, with commercial talks now underway between mobile network operators and smartphone makers to create devices that fit within the targeted price band.

As part of the initiative, the GSMA has held discussions with more than 15 smartphone manufacturers, and seven of those companies have expressed interest in backing the effort, Alix Jagueneau, the group’s head of external affairs, said.

“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 prices are making the push both more urgent and more complicated.

Jagueneau said the final cost of these devices will depend on a mix of factors, including financing models and tax treatment. Development banks, donors, and other financial institutions could reduce risk for operators investing in such handsets. At the same time, import duties and taxes on smartphones — which are sometimes classified as luxury goods — can push handset prices up by as much as 30% in some countries, she said.

The GSMA has not yet identified which companies will manufacture the devices, with Jagueneau saying that commercial discussions with smartphone brands are ongoing. Still, the organisation hopes to develop initial proof-of-concept devices this year, with early consumer versions potentially reaching the market by late 2026.

Jagueneau also said that none of the six countries selected for the pilot program has so far committed to cutting import duties or taxes on entry-level smartphones. She added that the GSMA is working with operators to establish an ongoing dialogue with governments over 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 decision last year to remove a 9% luxury excise duty on smartphones priced below R2,500 (around $150) and said other countries should consider taking similar action.

Thin margins and rising component costs

Industry analysts say it may be difficult, under current market conditions, to manufacture smartphones at or below$40 

“Pushing smartphones priced in the $30–$40 range could have been historically feasible when memory costs were significantly lower,” said Ahmad Shehab, a research analyst at Counterpoint Research.

Shehab said devices sold at that level would likely come with very basic specifications and extremely slim profit margins. He added that sourcing low-capacity memory components is also becoming more difficult because suppliers are increasinglyprioritising higher-capacity chips.

According to Counterpoint, the average selling price of smartphones in the Middle East and Africa was around $188 in the fourth quarter of 2025, underscoring the wide gap between current market prices and the $40 target.

“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.

Previous efforts to introduce ultra-low-cost smartphones in emerging markets have also run into obstacles. In 2014, Google launched Android One to promote affordable smartphones in countries including India, Pakistan, Bangladesh, and Indonesia, and extended the program to Africa in 2015. However, the initiative struggled to gain broad traction.

Google continued to support Android One in some countries for several years, including Japan, but it never became a dominant platform for entry-level smartphones.

Jagueneau said the current effort will require coordinated work among mobile operators, device makers, and governments, but stressed that improving access to affordable smartphones remains vital to bringing more people online.