AES Semigas


19 October 2020

5G smartphone market growing at 122.7% CAGR over 2020-2027

The 5G smartphone market is expected to grow at a CAGR of 122.7% from 2020 to 2027, according to a report from Polaris Market Research.

Demand for 5G smartphones in 2019 was 12.42 million units. However, the market saw a precipitous decline in average selling price (ASP) during first-quarter 2020 due mainly to the COVID-19 pandemic, and the price fall continued during second-quarter 2020. Another major reason for the decline was low-priced Chinese 5G devices. However, the overall market is expected to bounce back during Q3-Q4/2020 and is estimated to accelerate and grow during the forecast period, affecting the 5G device ASP.

5G technology is increasingly being commercialized in different parts of the globe, with China leading. Theoretically, 5G is 100 times faster than its predecessor, with estimated speeds up to 10Gbps, but smartphones require 5G-compatible sensors and receivers to support the additional speeds.

The increasing demand for high-speed Internet for both small- and large-sized businesses and individuals for buffer-free streaming and the prominence of over the top (OTT) services such as Netflix, Amazon Prime, Hulu, Disney+ etc are the main factors driving growth.

On-demand content is increasingly being preferred by the younger generation, and the advent of 5G smartphones will provide them with a tool for viewing high-quality content on the go. High-speed Internet is required for hassle-free streaming. Furthermore, with the growth of both residential and industrial Internet of Things (IoT) devices, smartphones will play the role of a personalized authentication device for enhanced security purposes.

Collaboration between smartphone makers, chipset providers and telecom providers will aid the acceleration of commercial 5G services. Furthermore, government bodies around the globe are mulling regulations for the use of 5G spectrum in order to speed up the adoption of 5G.

For example, in China the government has drastically reduced licensing costs to speed up the roll-out of 5G services. On the other hand, the US Federal Communications Commission (FCC) has amended the rules that govern equipment modification. New hardware can be installed on the existing poles to bring down the capital costs and speedup the deployment of 5G. Since 5G will be built mainly on the existing 4G infrastructure, the stakeholders will need to provide fool-proof strategies to ensure that the networks are capable of handling the additional data speed and connected devices, notes Polaris.

Key players operating in the market include Apple Inc, Ericsson, China Mobile, Huawei Technologies Co Ltd, Motorola Inc, Lenovo Group Ltd, BBK Electronics Corp, Nokia, LG Electronics Inc, TCL Communication Ltd, Xiaomi Corp, Samsung Electronics Co Ltd and Vivo Mobile Communication Co Ltd.

To increase their unit sales, 5G smartphone makers are focusing on indirect sales channels. For example, Xiomi is reducing its operational expenses by partnering with platforms such as Walmart and Amazon for 5G smartphone sales. Also, prominent players such as Samsung and BBK Electronics are aggressively pursuing the mid-range smartphone segment to target the middle and upper echelons of society.

Furthermore, the number of multi-SIM smartphone models are expected to increase in the coming years, as manufacturers are promoting dual-network capability in smartphones. Samsung, for instance, supports dual-SIM technology in its A51 5G smartphone, which was launched in April. These allow consumers to use a local and a roaming SIM in the same device during international travel.

Tags: Smartphone shipments




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