China Fires Starting Gun on 5G Scale Game

Operators switch on 5G services in China

Last week, on 1 November, China’s three main mobile operators — China Mobile, China Telecom and China Unicom — switched on their 5G networks, marking an important moment for the global 5G market: the start of the race for deployment of 5G at scale.

A ceremony on 31 October to celebrate the 5G launch included the three Chinese mobile operators and government officials from the Ministry of Industry and Information Technology, highlighting the importance of 5G to the country’s goal of achieving global technology leadership in the next few years. China’s other 5G licensee, the China Broadcasting Network, was not part of the ceremony.

Echoing the coordinated launch of 5G networks in South Korea earlier in 2019, services went live in over 50 cities including Beijing and Shanghai, with many other Chinese cities expected to welcome 5G very soon. According to the official announcement, 130,000 5G base stations will be deployed by the end of 2019, up from about 80,000 today, and we expect this number to continue to rise rapidly, thanks to encouragement from the Chinese government.

The three Chinese operators offer very similar pricing for 5G connections. Monthly tariffs range from 128 yuan (about $18) with 30GB of data, to 599 yuan (about $86) with 300GB of data. Some of the packages are tiered by speed, an industry move that CCS Insight predicted. Operators offer 5G-specific applications including games and virtual reality, which have been quite successful in South Korea. Even before the launch of 5G services in China, interest appeared strong, with 10 million pre-registrations recorded by early October 2019.

The 5G switch-on in China may have come a year later than the world’s first 5G launch in the US, but it happens at a time when many main factors for quick adoption have aligned. Momentum for rapid network deployment is coupled with strong commitment by all major Chinese smartphone makers to 5G: for example, Xiaomi plans to have up to 10 5G-enabled smartphones in its portfolio in 2020.

This wouldn’t have been possible without development on the 5G chipset front. Qualcomm’s Snapdragon X55 chips will allow smartphone makers to address much lower price points than the current sky-high levels in the early 5G markets, and the company’s 5G Snapdragon 6 and Snapdragon 7 series chipsets for the mass market will be available in 2020. MediaTek’s first-generation 5G chips, starting to ship in the current quarter, will target smartphones costing about 3,000 yuan (about $435). Devices based on its second-generation chipset will be priced below 2,500 yuan (about $355) when they release in the second half of 2020.

This brings us to the main reason why the news of 5G deployment in China is significant for the global 5G market. Despite the fact that 48 operators in 24 countries have rolled out 5G services, little has happened in terms of adoption since the first launch in October 2018 (with the notable exception of South Korea). There will be only 10 million 5G connections worldwide by the end of 2019, as 5G handsets remain quite expensive, sometimes above $1,000.

But 5G will roll out quickly in China, and importantly, the Chinese smartphone market will create scale, helping the entire supply chain for 5G handsets to see the prices of devices down. This will benefit not only China, but the entire global market. CCS Insight forecasts 230 million 5G handsets will be sold worldwide in 2020, and of those, about 100 million will be in China. The country will become the largest 5G market in the world already in 2020. We expect 5G connections in China will surpass half a billion in 2022 and 1 billion in 2025. The 5G scale game is on!

The chart below offers a snapshot of CCS Insight’s market forecast for 5G connections worldwide.

CCS Insight’s latest forecast for 5G connections is available to customers of our 5G service suite here. Subscribers to our mobile phone research service can access our latest forecast for 5G devices here.