5G Price Freefall, Huawei Trade Struggles Paint Uncertain Year for Smartphones: ABI

5G smartphones, “the most accelerated mobile technology generation ever launched,” could reach sub-$200 price points in 2021, leading to challenges for the industry, said ABI Research analyst David McQueen in a 2021 trend forecast Tuesday. 5G’s fast adoption brings a “raft of technical challenges” that may lead to substantial changes in mobile device design, McQueen said. Availability of 5G smartphone models will become more diverse, “brought to market quickly at a wide variety of price points, democratizing the 5G experience,” said the analyst.

A “seismic shift to lower price tiers” will be the main growth driver for accelerated 5G adoption, made possible by affordable chipsets from Qualcomm, MediaTek and Unisoc, said McQueen. That will leave a “squeezed” high end of 5G smartphones, he said. Smartphone replacement cycles could benefit short term, but the fast-tracked migration of 5G to lower-tier phones could have a domino effect on average selling prices and overall profitability. “It would be of little surprise if 2021 saw 5G smartphones fall below the $200 mark, driven by the availability of cheaper components and pricing policies of chipset vendors,” said the analyst.

5G will have positive and negative impact on the environment, said analyst Jun Wei Ee. The synergy between 5G and artificial intelligence and the IoT could mean lower energy consumption and increased efficiencies in operations long term, but energy consumption could also increase tremendously in the 5G world as the higher speeds encourage more usage among consumers and applications, he said. Accelerated adoption will lead to large amounts of electronic waste, said the analyst. He urged operators and manufacturers to do more to encourage recycling and the use of recycled materials in their 5G efforts.

Geopolitical trade wars left their mark on the smartphone market, with Huawei at the center, said McQueen. In the short term, Huawei “fought back,” retrenching in its home China market to bolster sales, but the “increasingly restrictive U.S. trade ban will reach a tipping point that could see a fundamental reshaping of the supply chain and chipset market” that will have “significant bearing” on the global smartphone vendor landscape, he said. Huawei is a market leader, with about 20% global share, but it's “struggling to stay in the market in the longer term and rebuild its now tainted brand outside of China,” McQueen said.

A diminished Huawei would leave a void that current smartphone vendors would rush to fill, McQueen said, citing Apple, Samsung, Google, Xiaomi, Oppo, Vivo and OnePlus. It could also enable resurrection of “once-notable” smartphone brands including LG, Motorola, Nokia-HMD and Sony, he said.

Ultra-wideband (UWB) will be ubiquitous in 2021, said ABI. Increased adoption will result from wider chipset availability, adoption across multiple segments and a “healthy UWB ecosystem across the entire supply chain,” said analyst Andrew Zignani. Historically, UWB has been used for real-time location service applications, but Apple pushed it mainstream in the iPhone 11, 12 and SE, along with Apple Watch Series 6 and the HomePod mini smart speaker. Samsung incorporated UWB in the Galaxy Note 20, and Xiaomi demonstrated the technology in smart home devices, Zignani noted. Other opportunities will emerge in the mobile space and in CE products as a “strong ecosystem of devices” emerges, he said.