The GSMA is flagging an emerging global risk: a new chasm between AI ‘haves’ and ‘have-nots’ unless urgent action is taken to address the digital divide and make smartphones affordable for people in low- and middle-income countries (LMICs).

While AI is transforming economies and societies, its benefits will remain out of reach for the billions of people who still do not use mobile Internet, despite more than 90% of them already living within mobile broadband coverage, the GSMA warns in its new ‘State of Mobile Internet Connectivity Report 2026’.

“AI has the potential to improve lives on an unprecedented scale, but AI is meaningless if people cannot get online in the first place. The greatest risk is not simply an AI divide between countries, but between people who can afford to participate in the digital economy and those who cannot,” says GSMA director-general Vivek Badrinath.

The report shows that 4.8- billion people now use mobile Internet on their devices, but growth is slowing, with the number of people coming online decreasing from 190-million in 2024 to 160-million in 2025.

About 3.1-billion people continue to live within the footprint of mobile broadband networks but do not use mobile Internet, as the majority do not own an Internet-enabled device.

The report identifies handset affordability as the single biggest barrier to mobile Internet adoption across the surveyed LMICs, followed by a lack of digital skills.

At the end of 2025, an entry-level Internet-enabled handset cost the poorest 20% of people in LMICs the equivalent of 44% of their average monthly income, rising to 76% in sub-Saharan Africa, with these costs expected to dramatically rise, driven by increases in memory costs.

“Unless we protect the affordability of entry-level smartphones, billions of people risk being excluded from the next generation of digital services before they have even had the opportunity to experience the Internet” says Badrinath.

GSMA analysis shows the scale of the opportunity. Until a year ago, reducing the price of entry-level smartphones to $30 could make devices affordable for almost 1.6-billion people, while reaching a $20 price point could make smartphones affordable for around 2.2-billion people currently living within mobile broadband coverage.

However, despite the efforts of operators and manufacturers, including the GSMA’s own Handset Affordability Coalition, achieving those price points remains out of reach, owing to the rising costs of smartphone memory and chipsets on the back of global demand for AI infrastructure and data centres.

According to the report and data from Counter Point Research, memory prices more than doubled between the third quarter of 2025 and the first quarter of 2026, before increasing by a further 80% to 90% during the second quarter of 2026.

The result is already visible in the market, with entry-level smartphone prices increasing sharply and global smartphone shipments forecast to suffer their biggest yearly decline on record, driven primarily by the collapse of the sub-$100 handset segment, the report highlights.

Emerging markets are expected to be hardest hit, as this places Internet access further beyond the reach of low-income consumers and threatens to reverse years of progress in closing the mobile use gap.

The GSMA warns that this could undermine not only digital inclusion but also the economic opportunity created by broader Internet adoption.

GSMA analysis estimates that closing the mobile use gap would generate $3.5-trillion in additional GDP between 2023 and 2030, with more than 90% of the benefits flowing to LMICs.

“The GSMA is calling on chipset and memory manufacturers to take meaningful steps to increase the availability of affordable components for entry-level handsets, in order to avoid a large portion of the population in emerging economies behind completely left out of the digital economy.”

This requires coordinated action from policymakers, mobile operators, device manufacturers and component suppliers, with the GSMA encouraging companies to start a dialogue with the wider mobile ecosystem, policymakers and multilateral financial institutions to identify solutions and bring affordable connectivity within reach of millions.

“We call upon all parties to mobilise all possible tools, both on the production side and on the distribution and taxation areas, and to take measures to ease reuse of devices,” Badrinath continued.

Improving handset affordability, alongside addressing other key barriers to digital inclusion, including low literacy and digital skills, safety and security concerns and the availability of relevant content and services, is critical to realising this opportunity.

As governments and businesses increasingly invest in AI-enabled services across healthcare, education, financial services and public services, addressing the digital divide and ensuring affordable access to smartphones is becoming an essential prerequisite for inclusive AI adoption.