Apple’s gamble — the iPhone now folds — and SA’s digital divide just widened

“What happened, Dada?” was the only reasonable question my son could ask after a strange sound escaped my body while watching Apple’s Surprise and Shine iPhone event. The screen was cycling through the different postures the iPhone Duo can be used in, and the squeal was in recognition of another new product category that Apple has solved with thoughtful software design.

Folding phones are in their eighth generation since Samsung surprised unassuming journalists with a hands-on experience with the then-rumoured original Galaxy Z Fold at the Galaxy S10 launch.

For context

Apple’s quiet conquest of SA’s small business sector

September 9, 2025

It was a different time, and the leaks weren’t as conclusive as those that revealed all the intimate details of the iPhone Duo, but nothing can prepare you for bending a smartphone display – and the same will be true for an iPhone.

But that phone is not on South African soil until October, so let’s focus on our lived reality.

On 1 April 2025, the National Treasury and the Department of Communications and Digital Technologies (DCDT) removed the 9% ad valorem luxury excise duty on smartphones priced under R2,500.

“One of my key priorities as minister has been to make smart devices more affordable,” the minister of communications and digital technologies, Solly Malatsi, said in a July statement welcoming the findings of the GSMA report on his grand economic experiment.

He continued:

“Every smartphone in the hands of a South African unlocks opportunities for economic activity that helps uplift the quality of lives. It enables young persons to search for jobs, learners to learn online and empowers citizens to easily access government services, online banking and connects entrepreneurs to more customers.”

It’s a digital world; we’re just living in it

But while government policy lowered tax barriers, smartphone original equipment manufacturers (OEMs) faced significant headwinds from global supply chain inflation – specifically in the memory chip and RAM markets.

At the Cape Town launch of the flagship Honor Magic V6 fold – which retails at R40,000 – Honor South Africa CEO Fred Zhou gave Daily Maverick direct insight into how manufacturers keep entry-level smartphones affordable.

According to his data, global RAM and memory costs doubled or tripled, driving up manufacturing baseline expenses at a time when consumer purchasing power remained static.

Zhou cautioned that OEMs must carefully calibrate device specifications to prevent prices from crossing the R2,500 threshold, where import duties reapply.

“So how to make the product still accessible? We have to choose the best balance or, as we say, the best spec, which meets the majority of the consumers’ needs, and bring it to South Africa.”

Zhou explained that maintaining products below the R2,500 duty line is crucial to avoiding compounding taxes: “Last year we started the product [pricing] at R1,899, and this year, even with the memory increase and everything, we still have maintained the product under R2,000.

“We still have that product and work with network partners to make the phone at the same price and maintain it at that level to be accessible for the consumers. It’s not like we jump by 50% or more and leave no choice for the consumers.”

Zhou confirmed the tax exemption directly drove growth and supply, telling Daily Maverick that Honor increased its sub-R2,500 device range from two models last year to three this year.

A model of emerging behaviour

The Global System for Mobile Communications Association’s empirical evaluation of South Africa’s tax policy between March 2025 and February 2026 revealed significant changes across sales volume, device category substitution, and total market value.

Before April 2025, entry-level smartphones (costing under R2,500) were the only market segment experiencing a sustained sales contraction. Tax relief reversed this trajectory immediately, moving average monthly unit growth from -7.9% to +6.2%.

Narrowing the price gap between feature phones and entry-level smart devices encouraged low-income households to upgrade. Entry-level smartphone volumes surged by 80%, while feature phone sales dropped by 87% over the same 11-month period.

This is important because there is not a feature phone on the market in South Africa that can access WhatsApp – not even KaiOS devices that Nokia used to peddle, because WhatsApp sunsetted that project years ago.

The South African experience provides key policy lessons for governments in developing markets seeking to reduce their mobile usage gaps. For instance, treating entry-level smartphones as essential tools rather than luxury items mitigates regressive taxation that heavily burdens lower-income citizens.

Smartphone access facilitates mobile financial services and digital payments, bringing informal micro businesses into the formal economic and tax ecosystem.

Devices like the iPhone Duo, which can make rational folding-phone naysayers seriously reconsider their position, are bad for Malatsi’s grand ambition. But they also make us demand more choice from the OEMs, and more thoughtfulness from product and software design to justify the high prices. DM