Egypt’s smartphone market shifts under new whitelisting regime

Egypt’s smartphone market is undergoing a pivotal transformation following the enforcement of a new whitelisting regulation in early 2025. The move responds to a concerning trend – nearly 80% of smartphones entering Egypt during 2023 and early 2024 were illegally imported, according to the National Telecommunications Regulatory Authority (NTRA). Aimed at curbing gray-market activity and enhancing import compliance, the new rules represent a structural shift for the industry.

All imported smartphones are now subject to a cumulative 38.5% in customs and taxes, as mandated by Egypt’s Ministry of Communications and Information Technology (MCIT) and the Ministry of Finance. This new regime not only acts as a deterrent for smuggled devices but also accelerates the shift toward local manufacturing. While OEMs and consumers face short-term disruption, the market is evolving toward greater transparency and predictability.

Legalization of channels disrupts gray-market distribution

The introduction of the whitelisting system – where only legally imported and registered smartphones will be activated on local networks – has bolstered official distributors. Gray-market channels, which thrived on undercutting official pricing through tax evasion, are now facing severe disruption. Key developments include:

• Empowerment of official channels: registered imports now enjoy protection under a digital system that verifies IMEI authenticity. This benefits CBU (Completely Built Unit) importers and assembly players aligned with regulatory norms.
• End-user awareness and control: the new Telephony app will allow citizens to check devices’ authenticity and understand payable fees prior to activation. This enhances consumer protection and limits the entry of smuggled or counterfeit phones.
• Market realignment: OEMs and channel partners are being forced to revisit their supply chain models, prioritizing regulatory compliance and exploring local sourcing strategies.

According to Canalys (now part of Omdia), smartphone shipments fell 18% year on year – from 780,000 in January 2024 to 642,000 in January 2025 – following an initial disruption. But industry sentiment is cautiously rebounding, with February showing a month-on-month recovery and early signs of stabilization. The shift is increasingly seen as a necessary correction to promote fair competition and long-term market health. As the broader implications continue to unfold, Q1 2025 is shaping up to be a key litmus test for the government, vendors and gray channel operators alike.

Domestic production gains momentum – but hurdles remain

Egypt’s ambition to become a regional smartphone manufacturing hub is accelerating. New assembly lines are operational, and government projections indicate that local production could meet up to 80% of domestic demand. MCIT has set an ambitious target: tripling local output from 3 million units in 2024 to 9 million by 2026. But realizing this vision will require more than policy declarations. Sustained growth hinges on tangible incentives, infrastructure investment and OEM confidence. Some of the challenges include:

• Cost competitiveness remains a concern: despite regulatory support, locally assembled devices remain 20% to 30% more expensive than gray-market imports. High factory operating costs, import duties on SKD components and additional tax burdens continue to weigh on margins.
• Mixed signals from import trends: according to CAPMAS, Egypt saw a 6.4% year-on-year increase in mobile imports in the first seven months of 2024. This points to persistent demand for international models but also highlights the slow ramp-up of local production capabilities.
• Strategic importance of policy clarity: sustained local manufacturing growth will depend on consistent policy support, greater incentives and streamlined customs processes to compete with imported alternatives.

Vendor response and future opportunities

In the short term, vendors are addressing the supply issues through CBU import and local production enhancement. In the long term, OEMs see Egypt as a key growth market, but their strategies diverge based on operational flexibility and risk appetite. Several brands are actively monitoring the landscape for opportunities in local production and ecosystem expansion.

• Samsung was among the first movers in local manufacturing and is now well-placed to benefit from favorable regulation. The vendor is also well-established in manufacturing in adjacent categories, including TVs and home appliances, leveraging synergies in retail and logistics.
• Xiaomi has made strategic moves to strengthen its presence in Egypt by partnering with local assembly players to support domestic smartphone production. The company has initiated local manufacturing through collaboration with a licensed factory in East Cairo, aligning with the Egyptian government’s push to localize tech production and reduce reliance on imports.
• OPPO and realme remain active, though their shipment trends have been more volatile, influenced by evolving policy changes and temporary logistical challenges.
• Investment interest in local assembly is rising, particularly among Chinese OEMs seeking to establish Egypt as a potential distribution hub for North and East Africa. But infrastructure gaps and high setup costs remain barriers to entry.

Egypt’s stable currency, expanding digital economy and preferential trade agreements with African markets make it attractive – particularly compared with Turkey, which faces currency volatility and higher geopolitical risk. Still, as customs duties rise on imported devices and components, OEMs may need to recalibrate pricing strategies to maintain competitiveness.

Compliance-led growth with cautious optimism

The whitelisting regulation represents a structural reset for Egypt’s smartphone market – shifting it away from price-undercutting gray imports toward legal, traceable and tax-paying channels. Though device affordability may face short-term headwinds, certified smartphones will benefit from improved reliability, security and after-sales service.

The country’s broader digitalization agenda, including fintech, e-governance and digital education, will fuel smartphone adoption. With 5G services set to launch across all four telecom operators in H1 2025, ensuring device compliance will be vital for a seamless rollout.

Canalys forecasts 8% smartphone market growth in Egypt in 2025, with a rising share of shipments coming through formal and locally assembled channels. Vendors that align with regulatory frameworks, scale local operations and position themselves as long-term partners in Egypt’s digital journey will be best placed to thrive in the new normal.