The global smartphone industry is entering a challenging period, with analysts such as IDC revising their growth projections for 2026 downwards.
most significant reason for the downgrade lies in the probability that smartphone prices are expected to soar next year, a reality which can be blamed on a shortage of memory components.
By Ernst Wittmann, TCL regional manager for Southern & East Africa, and global operator account manager for Africa at TCL
The scarce supply of memory can be blamed on massive demand for memory for data centres due to the artificial intelligence (AI) boom. DRAM and NAND flash storage are becoming significantly more expensive and harder to secure across the smartphone supply chain.
The result is that PC RAM prices spiked in 2025 – and we can expect smartphone prices to dramatically increase during 2026. Entry-level Android smartphones are likely to be particularly hard hit because customers in this segment are more price sensitive and because RAM and storage is a higher portion of the manufacturing cost.
According to TrendForce, contract prices for DRAM in late 2025 are up more than 75% year-over-year. Memory makes up around 10% to 15% of smartphone Bill of Materials (BOM) cost, meaning overall unit production costs have gone up by around 10%. Most manufacturers will pass these costs on to their customers since margins are already low.
This trend is unwelcome for TCL as a brand with a relentless focus on making smartphones more affordable. The reality is that phones that currently retail for R1 600 may soon sell for R1 800 or more, a price difference that could make a smartphone unaffordable for many entry-level customers.
Furthermore, with RAM manufacturers refocusing capacity on the data centre market, shortages could become even more acute. Low memory inventories could make it harder to secure supply for budget devices. About 80% of all prepaid mobile phones sold in South Africa are under R3 000, so the impact on our market could be significant.
For a consumer navigating the handset market in 2026, higher RAM and storage costs may have impacts beyond higher prices for new devices. We could see consumer choice shrink as narrow margins make cheaper models less profitable to manufacture and import. Costs of second-hand and refurbished devices will also inevitably rise.
It would be a pity to see the drive to digital inclusion falter because of a reversal in the trend of smartphones becoming more affordable and accessible. For that reason, I am working closely with mobile network operators, suppliers and fintech partners to find workable solutions. I am hopeful our ecosystem will find ways to navigate this challenge.
The South African government deserves credit for removing the 9 % ad valorem excise duty on smartphones priced below R2 500 as of April 2025. That commendable policy change has made a significant difference to many customers – a meaningful step to narrowing the digital divide.
A 10% increase to the threshold for exemption from the duty in the budget in February could help to soften the blow of higher memory costs for consumers and manufacturers alike. Doing so would preserve the gains already made in smartphone affordability and help ensure continued advances in digital inclusion in 2026.