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With the wireless supply chain completely aligned behind the 5G standard, the market for 5G smartphones is primed to go mainstream, with shipments soaring by a factor of eight in 2020.

The global 5G smartphone market is expected to surge to 231 million units this year, up from 29 million in 2019 and forecast to more than double from 2020 to 2021.

 

Wireless brands

Source: Omdia

Price will be the key factor driving the shipment explosion this year, with 5G smartphone average selling prices (ASPs) declining compared to 2019. Just as occurred in the 4G LTE era, 5G phone pricing is expected to decline quickly. Prices will begin to decrease next year as phone manufacturers use more efficient designs employing multimode modems. Within the next few years, prices will fall to between the $700 to $800 range, making them more affordable for price-conscious consumers.

The rollout of the first 5G smartphones in 2019 was associated with high prices, particularly for consumers. This first generation of phones established design requirements for chips, antennas and power consumption. However, their acceptance in the market was inhibited by high costs and a disparity between consumer expectations and network performance.

This situation is changing rapidly in 2020. The ramp up of 5G component and device manufacturing will drive the fastest sales increase of any wireless generation. The supply chain’s undiluted support for the 5G standard is the one of the main factors driving down costs and pushing up volumes.
Whereas both 3G and 4G faced competition from rival technologies vying for dominance, 5G has unanimous industry support, allowing the component and device supply chain to get lined up more quickly and to develop uniform integrations.

Confidence in the technology roadmap for 5G has prompted component suppliers to embed essential 5G support onto system-on-chip (SoC) devices. The availability of 5G SoCs is opening the mid-tier smartphone market to 5G much earlier in the technology’s deployment than for 3G or 4G. Overall, the average semiconductor content in high-end smartphones is expected to rise to $157.25 in 2022, up from $121.51 in 2019.

At the same time the expected feature set for smartphones has become more predictable, with dramatically improved computational power, screen resolution, camera quality and other technologies being baked into consumer expectations. On one side this means that 5G is being used by brands as a differentiator on already high-end smartphones. On the other hand, it means that flagship 5G handsets will be synonymous with features like flexible OLED screens, foldable form factors and advanced streaming video capabilities to compliment the high data rates of 5G.

While 2019 marked the beginning of 5G, many of the benefits of the technology remained unrealized due to the immaturity of the component and manufacturing supply chain. In 2020, a perfect storm of technology standardization, competitive supply chain and evolving consumer use-cases are pushing 5G phones into the mainstream.