5G remains a hot topic in the smartphone market this year. Smartphone brands and mobile processor manufacturers, such as Qualcomm and MediaTek, are striving to expand their share of the 5G market. According to the latest investigations by TrendForce, the Chinese government’s 5G commercialization efforts have been particularly aggressive, leading the country’s 5G base station deployment and network coverage to each score first place in the global 5G industry. TrendForce indicates that, aside from the various Android-based smartphone brands, Apple’s new models will also join the ranks of 5G smartphones in 2020. Given the total smartphone production forecast of 1.24 billion units in 2020, 5G handset production is expected to reach 235 million units, an 18.9% penetration rate. As such, Chinese brands, which were ahead of their competitors in 5G strategies, have a 75% share in the global 5G smartphone market in 1H20.
Chinese brands are expected to occupy four out of the top six spots of 5G smartphone brands ranked by production volume
An analysis of the projected top six smartphone brands ranked by 5G smartphone production volume shows Huawei firmly sitting in the first place. Huawei has shifted its focus to the domestic Chinese market under the impact of U.S. sanctions and in preparation for China’s active 5G commercialization efforts. The company is expected to produce about 74 million 5G smartphones this year. Apple’s 5G smartphone production is expected to total about 70 million units in 2020, which lands the company in second place. However, 5G functions will increase the production cost of smartphones accordingly. If Apple decides to directly reflect this added cost on the retail prices of the iPhone 12 series, it may lower its consumers’ willingness to purchase, in turn affecting the sales performances of the new iPhones.
Samsung has been experiencing setbacks in the Chinese market in recent years. Although these setbacks have not seriously affected its global market share and revenue, they have considerably slowed Samsung’s growth in the 5G smartphone market. Samsung’s 5G smartphone production this year is forecasted at 29 million units, placing the company in third place globally. Vivo, OPPO (including OnePlus, OPPO, and Realme) and Xiaomi are tied for fourth place. As Huawei’s aggressive domestic expansion in the past few years has compressed the market shares of the three brands in the Chinese market, they have been actively focusing on increasing overseas market shares to maintain their yearly production performances. Vivo, OPPO, and Xiaomi’s yearly 5G smartphone production volumes are projected to reach about 21 million, 20 million, and 19 million units, respectively.
Mid-to-low end 5G chipsets released by AP suppliers are expected to raise the penetration rate of 5G smartphones in 2021
TrendForce’s analysis of future developments in the 5G market shows that an aggressive push by mobile processor manufacturers will lead to the rapidly increasing presence of 5G chipsets in the mid-to-low end market, driving 5G smartphone production to surpass 500 million units in 2021, which will potentially account for about 40% of the total smartphone market. Once 5G chip prices reach a stable level this year, smartphone brands may look to gain additional shares in the 5G smartphone market by sacrificing gross margins. In doing so, they are likely to accelerate the drop of 5G smartphones’ retail prices, and the market may see the arrival of 5G smartphones around the RMB 1000 price level by the end of this year. Incidentally, it is worth noting that the penetration rate of 5G smartphones does not equal the usage rate of the 5G network, which depends on the progress of base station construction. Since the current 5G infrastructure build-out is pushed back as a result of the pandemic, the global 5G network coverage will be unlikely to surpass 50% before 2025 at the earliest, with complete coverage taking even longer.
