New Delhi: Riding on a strong 5G push, the global smartphone market will return to a full recovery by 2022 and 5G smartphones are expected to capture 50 percent of the global market by 2023, according to a new IDC report.
5G remains a priority for all smartphone OEMs despite the challenges with the Covid-19 pandemic and lack of consumer demand.
“While many of the top vendors have reduced their 2020 production plans to align with the market decline, we`ve seen most of the cuts focused on their 4G portfolios,” said Ryan Reith, program vice president with IDC`s ‘Worldwide Mobile Device Trackers’.
Most channels in developed markets have set the expectation that the portfolios they carry will be dominated by 5G units by the end of 2020 leaving less shelf space for 4G.
“However, we still believe that consumer demand for 5G is very low and when that is combined with the economic headwinds facing the market, the pressure to drive down hardware and service fees associated with 5G will become increasingly important,” Reith said.
The worldwide smartphone market is forecast to decline 9.5 percent (year over year) in 2020 with shipments totaling 1.2 billion units.
While the second quarter resulted in slightly better than expected numbers, the market was still down 17 percent (year over year) with visible signs of economic concerns.
This supply-driven 5G push mixed with a poor economic climate will only accelerate the drop in 5G average selling prices (ASPs) in 2020 and beyond.
In the past quarter, China saw 43 percent of 5G devices priced under $400.
IDC expects global 5G smartphone ASPs to hit $495 by 2023, which should eliminate most of the price concerns voiced by consumers in recent IDC surveys.
Prior to the pandemic, there was an expectation that total smartphone sales would return to growth in 2020. That is obviously not going to happen.
“Although we expect year-over-year growth of 9 per cent in 2021, that is only due to the large drop in 2020. The real recovery won`t happen until 2022 when smartphone volumes return to pre-COVID levels,” said Nabila Popal, research director with IDC.
Other elements beyond 5G will play a role in the market recovery, most notably the continued opportunity in developing markets.
“There continues to be a strong shift towards low- to mid-end 4G devices in developing regions, which make up over 80 per cent of smartphone volumes in these regions,” Popal said.
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