Year of the 5G Smartphone Opportunity

As the year of the Tiger begins, low-cost brands have a chance to pounce

The 5G story is something we’ve often talked about at CCS Insight. We’re now almost three years on from the initial wave of high-end 5G smartphones, and it’s been quite a journey. The world is a very different place — admittedly, this would probably be true even without the pandemic — and the dynamics in the smartphone market have also changed.

That’s why we’re keeping a very close eye on the market as the world seeks to move on from the disruption of Covid-19. CCS Insight’s analysis shows a backlog of delayed smartphone purchases waiting to be taken advantage of following a lull during the pandemic, and that 5G-capable devices are about to see a global rise in demand.

Some of the reasons for this are well-documented. We’re seeing the gradual expansion of 5G networks, crucial for related devices; it was recently announced that India will see 5G airwave auctions begin in 2022, starting the technology’s roll-out in the world’s second biggest wireless market. Furthermore, although the more straightforward iteration of 5G technology — sub-6 GHz — has been the most commonly deployed so far, the growth of higher-frequency millimetre-wave connectivity is expected to gain pace. A recent example has seen telecom operators in China accelerate millimetre-wave build-out in preparation for the Beijing Winter Olympic Games.

Perhaps more importantly, the prices of 5G-capable handsets have rapidly dropped as more-affordable chipset designs have dramatically reduced the manufacturing cost. As a result, the technology is now more accessible than ever before. There’s a wide selection of cost-effective handsets available to customers from brands including Honor, Infinix, Oppo, Realme, Vivo, Xiaomi and ZTE — many of which have gained market share at the expense of Huawei.

What’s interesting is that the approaches of these firms have varied widely. The largest makers of low-cost smartphones, such as Huawei and Xiaomi, have typically designed and built one-size-fits-all products, standardizing their devices for all markets and making deployments far easier. But other names in the industry have decided to offer regionally differentiated versions that align with customers’ needs, creating a competitive advantage even against much larger brands.

Infinix, which recently launched its first 5G smartphone, the ZERO 5G, is an interesting example in this regard; it has invested in artificial intelligence-based computational photography which caters to a wider range of skin tones, improving the photography experience for a diverse audience. Similarly, artificial intelligence has been used as part of a translation tool in regions of India and Africa, supporting multiple dialects.

These are just snapshots of approaches to the low-cost smartphone and 5G opportunity. However, on both fronts we’re forecasting rising demand in the coming years. Some of the problems the industry has faced, including Covid-19 and associated supply chain shortages, look set to calm, giving suppliers the chance to increase sales. We believe there’s pent-up demand in some emerging markets, where customers are poised to upgrade to handsets with new features and technologies.

Therefore, we expect shipments of mobile phones to recover to 1.89 billion worldwide in 2022, up from 1.6 billion in 2021; we also predict that emerging markets will be an important contributor to this trend. In India we project that mobile phone sales will increase 20% by volume year-on-year, with a similar rise of 19% in the Middle East and Africa and 13% in Eastern Europe and the emerging Asia–Pacific markets. More broadly, we project that this year 5G will become deployed in more devices than ever before, comprising almost half of global shipments before taking the majority share in 2023. Devices such as the Honor 50, Infinix ZERO 5G, Realme GT and Xiaomi 11T all look set to benefit from this rising tide.

All told, it’s a very promising time for the global smartphone market, with a range of factors driving an expected recovery in 2022. The predicted increase in buyer confidence is set to coincide nicely with a surfeit of low-cost, impressively built smartphones where 5G is increasingly common, and we believe many people will choose to upgrade to the latest and greatest in wireless technology so as not to miss out. As network deployments continue to expand and powerful, more-affordable smartphones reach new markets, this signals a positive — and potentially prosperous — year ahead.