Steep Development for 5G Phones in 2020

Sales will rocket as prices tumble

Commercial 5G networks are currently available in more than 20 countries in Western Europe, North America, the Middle East, Africa and Asia-Pacific.

The big success story so far is South Korea. The three main network operators there — SK Telecom, KT and LG Uplus — collectively reached 3 million 5G connections on 9 September 2019, having launched 5G just five months earlier. SK Telecom was the first operator to reach 1 million 5G customers, achieving the milestone in just 140 days, twice as fast as the early days of 4G.

Quick network roll-out, strong government support, handset subsidies, attractive service plans and some innovative consumer offers related to gaming and virtual reality have all contributed to this achievement. We expect South Korean 5G connections to surpass 5 million by the end of 2019, accounting for more than 8% of all mobile connections in the country.

Elsewhere the uptake of 5G has been much slower. The reasons for this includes difficult roll-out of networks in many markets, uncertainty about the use of Huawei equipment, low marketing activity in markets like the US, and activists raising health concerns about 5G networks in markets like Switzerland. In addition, early 5G handsets have not made things easier.

A significant number of 5G mobile phones have been on sale since April 2019. Currently there are 5G phones from Samsung, Huawei, Xiaomi, Oppo, OnePlus, LG and others. However, the appeal of these early handsets hasn’t been overwhelming: they’re expensive — typically close to or above $1,000 — and they don’t support all frequency bands, especially sub-6 GHz frequency-division duplex spectrum, which makes them less future-proof in some markets.

With this is mind, we expect only 10 million 5G-enabled handsets to be sold worldwide in 2019, and more than half of those will be in South Korea.

But things will start moving quickly in 2020. Prices of 5G mobile phones will start to come down, prompting adoption by people who want the latest mobile technology (and there are plenty of those — see Survey Reveals Early Consumer Appetite for 5G) and by people who are buying a new smartphone and want it to be future-proof.

The first step in 5G’s move down from the top tier was made by Samsung with the launch of the Galaxy A90 5G in September, which retails at about €750 or $830. In 2020 we expect major progress with the introduction of the Snapdragon X55 chipset by Qualcomm, which will address multifrequency support and lower the cost of future devices. Qualcomm will launch more mass-market 5G Snapdragon 7 series and 6 series chipsets in 2020 too, and MediaTek will play a key role in driving down handset prices in 2020.

Another big factor in 2020 will be China. Operators there are expected to launch 5G services in the next few days or weeks, and network deployments will be very fast: we expect China to be home to half of world’s 5G base stations by the end of 2020. Encouraged by the government, everyone involved in 5G — network equipment providers, operators, component suppliers and handset makers — will work hard to make 5G happen quickly. Handsets supporting 5G connectivity are already selling in China in very small numbers, but we project that 100 million will be sold there in 2020. This will mean that companies in the entire handset value chain will be able to gain scale.

The combination of mid-range chipsets and economies of scale will drive the price of 5G handsets down worldwide, to reach as low as $500 in 2020.

Another important development in 2020 will be the launch of the first 5G iPhone, which is expected in September 2020. This device will be particularly important in North America and Western Europe, where Apple has a huge number of loyal iPhone users.

With all these developments in mind, it should be no surprise that we expect 230 million 5G-enabled mobile phones to be sold worldwide in 2020, or about 12% of all mobile phones sold.

From there, 5G phones will follow the typical path, trickling down the price tiers and appearing in every market, even in those where 5G networks have not yet been launched. By 2023, 5G phones will account for almost half of global mobile phone shipments (see below).

Subscribers to our mobile phone forecast can access the full set of numbers here. Our full forecast for 5G connections worldwide can be accessed by subscribers here.