Huawei will lead the global 5G smartphone production despite Apple launching its devices later this year.
5G remains a hot topic in the smartphone market this year, as smartphone brands and mobile processor manufacturers, such as Qualcomm and MediaTek, strive to expand their shares in the 5G market.
Out of the forecast 1.24b smartphone production this year, 5G handset production is expected to reach 235m units, an 18.9% penetration rate, and it is expected to reach about 75% penetration rate in 2023, according to research firm TrendForce.
Chinese brands are expected to occupy four out of the top six spots of 5G smartphone brands ranked by production volume as the Chinese government’s 5G commercialisation efforts have been particularly aggressive, leading the country’s 5G base station deployment and network coverage to each score first place in the global 5G industry.
Chinese brands, which were ahead of their competitors in 5G strategies, occupied a 75% share in the global 5G smartphone market in the first half of the year.
Huawei has shifted its focus to the domestic Chinese market under the impact of US sanctions and in preparation for China’s active 5G commercialisation efforts.
Huawei in aggressive domestic expansion
Huawei is expected to produce about 74m 5G smartphones this year. Apple’s yearly 5G smartphone production is expected to total about 70m units in 2020, which lands the company in second place.
However, 5G functions will increase the production cost of smartphones accordingly. If Apple decides to directly reflect this added cost on the retail prices of the iPhone 12 series, it may lower its consumers’ willingness to purchase, in turn affecting the sales performances of the new iPhones.
Samsung has been experiencing setbacks in the Chinese market in recent years. Although these setbacks have not seriously affected its global market share and revenue, they have considerably slowed Samsung’s growth in the 5G smartphone market.
Samsung’s 5G smartphone production this year is forecasted at 29 million units, placing the company in third place globally. Vivo, Oppo (including OnePlus, OPPO, and Realme) and Xiaomi are tied for fourth place.
As Huawei’s aggressive domestic expansion in the past few years has compressed the market shares of the three brands in the Chinese market, they have been actively focusing on increasing overseas market shares to maintain their yearly production performances.
Vivo, Oppo and Xiaomi’s yearly 5G smartphone production volumes are projected to reach about 21 million, 20 million and 19 million units, respectively.
TrendForce’s analysis of future developments in the 5G market shows that an aggressive push by mobile processor manufacturers will lead to the rapidly increasing presence of 5G chipsets in the mid-to-low end market, driving 5G smartphone production to surpass 500 million units in 2021, which will potentially account for about 40% of the total smartphone market.
Once 5G chip prices reach a stable level this year, smartphone brands may look to gain additional shares in the 5G smartphone market by sacrificing gross margins.