x Abu Dhabi, UAEMonday 24 July 2017

Cheaper smartphones to widen net in North Africa

Declining price of entry-level smartphones is forecast to stimulate internet use in markets such as Egypt and Morocco.

Smartphones by manufacturers such as Samsung, LG and Motorola are available for less than Dh400. Victoria Hazou for the National
Smartphones by manufacturers such as Samsung, LG and Motorola are available for less than Dh400. Victoria Hazou for the National

Smartphones priced at less than US$100 are set to boost internet use in countries such as Egypt and Morocco.

The US chip maker Qualcomm expects the retail price of basic smartphones to fall, stimulating demand for web-enabled handsets in the low-income markets of North Africa.

Internet use in the region is low compared with other markets, according to the International Telecommunication Union (ITU). In Egypt, only 26.7 per cent of its residents use the internet, compared with 78 per cent in the UAE.

The availability of cheaper handsets would boost demand for web-enabled smartphones in such countries, said Qualcomm, based in California.

"I expect to see smartphone handsets at $100 [Dh367] or below in the next 12 months in this region," said Jay Srage, the president of Qualcomm Middle East and Africa. "Smartphone penetration is three times as high in the UAE or Saudi compared to Egypt and Morocco. Our objective is to bring the price down in those emerging markets."

Paul Jacobs, the chairman and chief executive of Qualcomm, said the mobile internet could help to "bridge the digital divide" in emerging markets.

"The only internet access most people have in many of these markets is through their mobile phones," Mr Jacobs said.

He said the company was focusing on producing lower-cost chips for use in smartphones, which typically offer web browsing, e-mail and access to social networks.

"We're investing a lot of money into driving the cost of the devices down," Mr Jacobs said. "We see affordable smartphones really growing … in these emerging markets. We're seeing phones in the $150 range, and a strong effort to try to drive that price point down even further."

In the UAE, Apple's latest iPhone model costs Dh2,449 on a pre-paid plan with Etisalat. However, smartphones by manufacturers such as Samsung, LG and Motorola are available for less than Dh400.

Among semiconductor firms that rely on outside foundry companies to manufacture their chips, Qualcomm is the world's largest. It reported revenues of $3.88 billion in the second quarter.

In January last year, Qualcomm signed a collaboration agreement with Globalfoundries, the Abu Dhabi microchip maker. Under the agreement, it was proposed Globalfoundries would start accepting Qualcomm chip designs for manufacture.

The Advanced Technology Investment Company (Atic), which is owned by the Abu Dhabi Government, owns almost 90 per cent of Globalfoundries.

A Globalfoundries chip-manufacturing plant is being built in the UAE capital at a cost of up to $8bn, and is set to start operations in 2015.

Mr Srage said there were "ongoing discussions" between Qualcomm and Globalfoundries, but would not comment on whether Qualcomm chips would be manufactured at the new plant.

bflanagan@thenational.ae