Forget Vodacom’s R899 Smart 4 mini, launched last week. Forget, too, MTN’s entry-level, R499 Steppa smartphone, which the mobile provider launched earlier this year. British semiconductor firm ARM Holdings is predicting the cost of smartphones will drop to just US$20 (R206). And it will reach that price point before the year is out.

Many smartphone and tablet manufacturers, including Qualcomm, use processors based on ARM’s designs.

Technology website AnandTech is reporting that ARM expects there will be more than a billion sub-$150 smartphones shipped by 2018, about double the figure today, as manufacturers shift focus from the high end of the market to mid-tier and entry-level devices.

According to the website, continued scaling on process technology, combined with continued development of small and power-efficient processor cores, will ensure that even the lowest-cost mobile devices in future are smartphones.

Two factors, ARM says, will drive shipments: the performance of entry-level devices and their overall cost.

“ARM believes that the floor for an entry-level smartphone running Android (today with a single-core Cortex A5 system on a chip) is $20, and that we’ll see the first devices on sale at that price point in the next few months,” AnandTech quotes ARM as saying. A single Cortex A5 is faster than the ARM-based processor found in the original iPhone, which retailed for $599 when it was introduced in 2007.