The world is accelerating the adoption of 5G technology in every way imaginable. The demand for 5G smartphones, in particular, is skyrocketing across the globe, with OEMs racing to launch high-tech devices with jaw-dropping features and specifications at increasingly affordable prices. The latest data from Counterpoint Research highlights this trend, revealing that 5G accounted for a whopping 66% of all smartphones sold globally in H1 2024.
In simpler words, in the first of 2024, two out of every three smartphones sold worldwide were 5G-enabled.
Now, let’s delve into how the demand for 5G smartphones has increased over the years and explore the challenges OEMs face in making them more accessible.
Adoption of 5G Smartphones: 2019-2023
The share of 5G smartphones in global sales increased an impressive 27 percentage points in the last three years, up from a 39% share of 5G smartphones in H1 2021.
The world’s first 5 G-capable smartphone was launched in 2019, before the COVID-19 pandemic. At that time, many industry analysts anticipated a massive surge in demand for these high-technology smartphones within a couple of years; however, the exorbitant price of 5G smartphones will be a major challenge in widespread adoption.
The real breakthrough for 5G came with the launch of the Apple iPhone 12 series in 2020, which boosted the global 5G penetration from a mere 2% in 2019 to nearly 20% in 2020. Despite facing huge criticism, the iPhone 12 series achieved remarkable success, as sales exceeded the 100 million mark in just seven months of its launch.
It is worth noting that the rapid growth in 5G smartphone sales in both 2020 and 2021 was primarily confined to the premium segment. This limitation was largely due to the high cost of 5G chipsets, which restricted the technology’s availability to higher-end models.
Over the following two years, the growth rate of 5G smartphones decelerated significantly, moving from triple-digit percentages to double-digits and eventually to single-digit growth by 2023. This slowdown can be attributed to the fact that 5G had already achieved a substantial presence in mature markets, where it accounted for over 80% of smartphone sales.
Despite slowing growth, 5G-capable smartphone shipments exceeded 2 billion units in Q4 2023. A majority of them came from developed markets such as China, US and Western Europe.
Exorbitant Price of 5G Smartphone: A Barrier to Adoption?
As the demand for 5G smartphones continues to grow, the next significant wave of growth is expected to emerge from developing markets such as Latin America (LATAM), India, and the Middle East and Africa (MEA). These regions represent a significant opportunity for expanding 5G adoption, driven by ongoing reductions in average selling prices (ASPs). In India, the ASP of 5G smartphones dropped 5% YoY in 2023 to US$374.
From 2019 to H1 2024, the average selling prices (ASPs) of global 5G smartphones have dropped more than 30%. This price decline is largely attributed to chipset manufacturers like Qualcomm making cheaper 5G chipsets, combined with OEMs strategically selecting components to reduce costs.
Breaking down the price segment of 5G smartphones reveals interesting findings. In H1 2024, a majority, 98%, of smartphones priced above $400 sold globally were equipped with 5G technology. The share of 5G smartphones in the $100-$399 segment is also increasing rapidly, with 64% of all smartphones sold during this period being 5g.
However, nearly half of the smartphones in the $100-$249 segment are still 4G, and the <$100 segment remains largely untapped. To achieve widespread 5G adoption, OEMs must focus on making 5G smartphones available in these lower price bands.
As we look ahead, the future of smartphones is undeniably 5G. With OEMs leaving no stone unturned to make these cutting-edge devices available across all price points, from premium to pocket-friendly, the adoption of 5G smartphones is expected to rise dramatically in the coming years.