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Kenyans face costlier budget smartphones on AI chip boom
Kenya’s local smartphone assembly industry has largely been built on the promise of affordable devices financed through instalment plans to reach first-time users.
Kenyan consumers are likely to dig deeper into their pockets to buy locally assembled smartphones as a global scramble for artificial intelligence (AI) chips sends the price of critical memory components soaring and squeezes manufacturers targeting low-income buyers.
The price of memory chips, largely sourced from China and used in smartphones, laptops and other electronics, has increased up to fourfold in the past year as technology giants such as OpenAI, Google and Meta ramp up investment in AI infrastructure and data centres.
The AI boom has tightened global supplies of memory chips used in consumer electronics, piling pressure on Kenya’s smartphone assembly industry and threatening the affordability model that has helped expand smartphone access among low-income households.
The price of Random Access Memory (RAM), once among the cheapest components in electronics manufacturing, has more than doubled since October 2025 and is expected to rise further this year, hitting local assemblers such as M-Kopa, East Africa Device Assembly Kenya Limited, and Sun King hard.
For now, most manufacturers say they are absorbing part of the increased costs by trimming expenses elsewhere in the production chain to protect their low-cost, pay-as-you-go business models. They have, however, not ruled out raising handset prices if chip costs remain elevated.
“Demand for AI memory is very high, which means manufacturers are dedicating the majority of their capacity to AI. That has pushed up the cost of memory for us significantly,” says Ismael Abisai, head of manufacturing at M-Kopa.
“The cost for memory has gone up three to four times. A memory type that you used to buy for $19 (Sh2,454) is now $65 (Sh8,394),” he adds.
RAM is a critical smartphone component used to temporarily store data, run operating systems such as Android and manage active applications. As AI-powered features become more common in devices, demand for high-performance memory chips has intensified.
Most smartphones rely on dynamic random-access memory (DRAM) and NAND flash memory chips. However, AI data centres require more advanced (and profitable) variants such as high-bandwidth memory (HBM), prompting manufacturers to prioritise supply to major cloud service providers over consumer electronics firms.
This shift has seen leading chipmakers including Samsung, SK Hynix and Micron Technology channel production capacity toward AI-focused clients such as Amazon, Microsoft, OpenAI and Google, tightening global supplies for smartphone manufacturers.
Nairobi-based M-Kopa assembles about 7,500 smartphones daily using parts sourced from Chinese original design manufacturers before installing Android software licensed by Google.
The company targets low-income consumers through hire-purchase arrangements, allowing customers to pay deposits before settling balances through daily, weekly or monthly instalments.
Industry analysts now warn that rising memory prices threaten the economics underpinning low-cost smartphones globally. Market research firm TrendForce estimates that DRAM prices rose between 90 percent and 95 percent in the first quarter of 2026, while NAND flash prices increased by up to 60 percent due to surging AI demand.
According to Counterpoint Research, some low-end smartphones could disappear from the market altogether as shrinking margins force manufacturers to either reduce device specifications or shift focus to higher-end products.
Meanwhile, International Data Corporation forecasts that the average global smartphone price will rise 14 percent this year to a record $523 (Sh67,597), while devices priced below $100 (Sh12,925) may disappear entirely. Global smartphone shipments are also projected to fall to their lowest level in more than a decade.
Although leading memory producers have pledged billions of dollars in investment to expand output, industry experts warn that new semiconductor production lines can take at least a year to become operational. The sector’s challenges have also been compounded by logistical disruptions linked to the conflict in the Middle East, which has affected shipping routes and air freight capacity.
Since fighting escalated in late February, air cargo operations through major hubs such as Dubai and Doha have faced restrictions, with airspace closures across the Gulf forcing airlines onto longer and more expensive routes.
“Shipping timings have changed,” says Martin Kingori, M-Kopa Kenya General Manager. “Flights through Dubai are hard. We are not able to fly anything in because costs are going up and space is limited.”
Manufacturers have increasingly shifted to sea freight, extending delivery timelines from roughly two weeks to as long as a month.
“For us who source our components from China, freight costs have gone up by about 10 percent,” Mr Kingori adds.
The global supply crunch comes at a sensitive moment for Kenya’s emerging smartphone assembly industry, which has expanded rapidly since 2023 following government incentives aimed at localising production. In June 2022, Kenya introduced a 10 percent excise duty on imported phones in addition to an existing 25 percent import duty.
Since entering the assembly business in January 2023, M-Kopa says it has produced more than 3.2 million devices and refurbished over 300,000 others.
“The good thing with having a factory is that you can optimise different parts of the operation,” Mr Abisai says, adding that some components had been secured earlier at lower prices through long-term supplier agreements.
Other firms have also entered the market. Sun King last year established a manufacturing facility in Tatu City, with its first locally assembled smartphone launched in February.
Meanwhile, East Africa Device Assembly Kenya Limited, a joint venture involving Safaricom, Jamii Telecommunications and Chinese firm Shenzhen TeleOne Technology, has been producing low-cost 4G smartphones from its Athi River plant. The company reported producing 360,000 devices in its first year of operation in 2024.
Kenya’s local smartphone assembly industry has largely been built on the promise of affordable devices financed through instalment plans to reach first-time users. Some locally assembled smartphones are sold with deposits as low as Sh2,600 and daily payments from Sh55.
But as AI-driven demand reshapes the global semiconductor market, manufacturers are increasingly being forced to choose between absorbing higher production costs and passing them on to consumers.
“That’s why financing becomes a solution for us,” Mr Abisai says, referring to the pay-as-you-go model that spreads costs over time.
Global electronics brands, including Dell, Asus, Acer and Xiaomi, have already warned of possible price increases, while Sony has temporarily halted sales of some memory card products because of chip shortages.
