Rising AI Chip Demand Threatens to Push Smartphone Prices Beyond Reach for Nigerian Consumers

The global surge in artificial intelligence development is creating unprecedented demand for semiconductor chips, a trend that industry experts warn could make smartphones increasingly unaffordable for many Nigerian consumers.

Peter Sokunbi of Neradon Integrated Services, a key player in Nigeria's mobile device market, has already observed significant price increases since December 2025. He predicts that phone prices in Nigeria could rise by as much as 60% in the coming months.

"The eight-gigabyte RAM we used to buy at ₦15,000 ($9.38) or ₦20,000 ($12.50) is now ₦40,000 ($25)," Sokunbi explained. "At 2,000 pieces, that is ₦80 million ($50,000) without taxes and fees. This increase happened within two months."

The primary driver behind these price hikes is a global chip shortage fuelled by the rapid expansion of AI technologies. As tech giants worldwide invest heavily in AI infrastructure, they are consuming vast quantities of advanced semiconductors, leaving fewer resources for consumer electronics like smartphones.

For Nigerian consumers, the implications are particularly concerning. The country has one of the largest mobile phone markets in Africa, with smartphones serving as the primary means of internet access for millions of citizens. Rising device costs could further widen the digital divide and limit access to essential online services including banking, education, and e-commerce.

The semiconductor shortage affects not just memory components but also processors, display drivers, and other essential chips that power modern smartphones. Manufacturers are prioritising AI data centre equipment and high-end devices, potentially reducing supply for mid-range and budget smartphones that dominate the Nigerian market.

Industry analysts note that the situation is compounded by currency fluctuations and import duties, which already make electronics more expensive in Nigeria compared to other markets. The additional pressure from global chip shortages could push entry-level smartphones beyond the means of average Nigerian workers.

Mobile phone retailers across Lagos, Abuja, and other major cities report that consumer demand has already begun to soften as prices climb. Many Nigerians are delaying upgrades or opting for refurbished devices instead of new purchases.

The Nigerian government's efforts to promote local assembly of mobile phones have shown some promise, but domestic manufacturing still relies heavily on imported components. Without local chip fabrication capabilities, Nigerian phone assemblers remain vulnerable to global supply chain disruptions.

Tech experts recommend that Nigerian consumers consider purchasing devices sooner rather than later if they anticipate needing upgrades, as prices are expected to continue rising throughout 2026. Additionally, proper device maintenance and extended use cycles could help offset the impact of higher replacement costs.

The global chip shortage shows no immediate signs of resolution, with major semiconductor manufacturers announcing multi-billion dollar expansion plans that will take years to complete. Until new production capacity comes online, Nigerian consumers and businesses alike will need to navigate an increasingly expensive technology landscape.

Telecommunications companies operating in Nigeria may also face challenges as they work to expand 4G and 5G coverage, potentially slowing infrastructure development if network equipment costs rise significantly.

The situation underscores Nigeria's vulnerability to global technology supply chain disruptions and highlights the need for strategic investments in digital infrastructure and local manufacturing capabilities to ensure long-term technology access for its growing population.