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5G Could Restart Growth in Smartphone Market by 2020

Sept. 11, 2019
5G Could Restart Growth in Smartphone Market by 2020

Shipments of 5G smartphones will surge to more than 100 million units by the end of 2020 as the coverage of 5G networks grows and the premium prices of today's handsets come down, according to a report by International Data Corporation. IDC said that next year 5G handsets could account for close to 10% of global volumes, which have been hammered in recent years by consumers taking longer and longer to upgrade to new models

The global rollout of 5G technology could turn things around in the mature smartphone market, which has been struggling to return to growth over roughly the last three years. In its latest forecast, IDC said shipments of 5G smartphones could reach 9% market share by the end of 2020, with global shipments skyrocketing to 123.5 million units next year. IDC sees shipments of 5G-enabled handsets rising sharply to 28% of global phone volumes by the end of 2023.

2G, 3G, 4G and 5G smartphones shipments are set to decline slightly in the second half of the year even as OEMs push to clear out inventory ahead of 5G handset production ramping up in 2020, IDC said. Shipments are set to shrink by more than 2% year-over-year in 2019, marking three straight years of declines. IDC expects to see 1.6% growth in shipments next year as consumers shell out for smartphones that can connect to 5G networks being rolled out globally.

Sales of early 5G smartphones have been hampered in large part by prices that often top $1,000. Qualcomm is the primary provider of modem chips for the vast majority of phones that can hook to 5G networks, which are designed to transfer data 10 to 100 times faster than current 4G technology. The San Diego, California-based company is selling modems to Oppo, Vivo, Xiaomi, LG and Samsung, which also plans to sell phones with its own integrated 5G SoCs. 

Industry analysts say 5G smartphone prices will start to come down in 2020. Qualcomm plans to add its 5G modems to its mid-range Snapdragon Series 6 and Series 7 apps processors, which are today slapped inside smartphones that cost from $200 to $400. Adding 5G technology to more affordable chips could help more than 2 billion smartphones to upgrade to new models, Qualcomm said. The 5G Snapdragon 7 Series SoCs are due out in phones by early 2020.

IDC said it cut the projected average selling prices of 5G phones in its forecast, particularly in China. Ryan Reith, vice president of IDC's worldwide mobile device tracker, said mid-range 5G handsets will start shipping in 2020 for sub-6 GHz bands—the frequency range favored in China and Europe for early 5G deployments. Baseband modems that can only access the sub-6 GHz frequencies generally cost less than chips that also work with millimeter wave networks.

"To be clear, we don't think 5G will be the savior in smartphones, but we do see it as a critical evolution in mobile technology," Reith said in a statement. "We expect the 5G ramp on smartphones to be more subtle than what we saw with 4G, but that is primarily because we are in a much different market today. The biggest difference is the level of penetration we are at now."

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