How the pandemic of COVID-19 is infecting the health of 5G
The plague of coronavirus has also unleashed a toxic backlash against the rollout of 5G
Ian White
April 21, 2020
But second-hand market will remain strong as consumers delay upgrades says CCS Insight
The global mobile phone market is expected to slow by 13 per cent this year with shipments crashing by 29 per cent from Q2 so says analyst firm CCS Insight in its latest forecast which calculates the impact of the pandemic catastrophe.
Sales will be hit by a hat-trick of problems. Disruption to normal life will dampen demand from consumers and businesses.
The slowdown in supply chains will hinder mobile phone manufacturing and distribution. And the impact on the global economy will continue even after the outbreak is over.
Slowdowns
CCS analysts expect 1.57 billion mobile phones will be sold globally this year, the lowest number in a decade as Covid-19 means demand among businesses and consumers plummets, while slowdowns in supply chains and grounding of plans hits manufacturing and distribution. But CCS has some good news.
The mobile market will recover quicker than most as people now regard connectivity as crucial. But the usually-lucrative Christmas quarter will suffer a sales dip of around three per cent. Demand could bounce back 12 per cent in 2021, which would be four per cent higher than last year.
And by 2022, delayed purchases for mobile phones will result in 13 per cent growth to almost two billion phones. CCS expects 5G handsets will become more affordable and drive sales in the second half of the year.
Sales of 5G-enabled phones mainly in China, will reach 210 million units. In 2024, sales of 5G phones will account for 58 per cent of mobile phones.
Weak demand
CCS Insight Vice President of forecasting Marina Koytcheva explains: “Data from China gives us a good indication of the effect that lockdowns and consumer uncertainty have on demand for phones.
“In January and February sales volume fell 44 per cent from the same period in 2019. Early data from other countries that have introduced strict measures to fight the pandemic suggests similar declines.
“Demand for mobile phones will be very weak over next few months, as people stay at home, shops are closed and the uncertainty for families and businesses is high.”
On this basis, CCS Insight expects global sales of mobile phones in the second quarter of 2020 to be 29 per cent lower than those in the second quarter of 2019.
“In disruption to the supply chain for mobile phones in China led to shortages of some products in March. Although manufacturing in the country is ramping up and returning to normal levels, operations in other territories such as India are now on hold. Transporting goods is also proving challenging.
“Some companies are now having to deal with being unable to meet demand for certain products. This is particularly painful because they have only a short window
of opportunity before people and businesses switch strictly into money- saving mode. In the aftermath of the current situation, we expect the biggest detrimental impact on sales will come from weak demand”.
Subdued
In the second half of 2020, when life returns to a new normal, CCS Insight expects demand
for mobile phones to remain subdued, as a weak macroeconomic environment will see
many consumers and businesses delay new purchases and upgrades of existing mobile phones. Even as the situation improves, the traditionally strong Christmas quarter is expected to deliver three per cent lower sales this year than in 2019.
“However, one thing that is clear is that connectivity and smart devices have remained extremely valuable to people and businesses in these difficult times, allowing them to continue working, studying and staying in touch.
CCS Insight believes this high value placed on mobile phones will help the market bounce back quickly, as long as the macroeconomic situation improve”, she said.
Demand
CCS Insight notes that it expects demand for mobile phones to grow by 12 per cent in 2021, almost reaching the levels seen last year, with smartphones sales outpacing 2019 by a good four per cent.
In 2022, as the economy recovers, delayed purchases will result in another boom of 13 per cent growth to almost two billion phones.
A shining star in the market is 5G, In January 2020, 5G-enabled mobile phones accounted for more than one in four phones sold in the otherwise weak market in China.
Koytcheva observes, “Phone- makers are stepping up their efforts to bring 5G to more-affordable pricing levels, and we expect this behaviour to accelerate in the second half of 2020.
In an effort to offset the weakness in the first half of the year, we believe phone-makers will do everything they can to grab a piece of the shrinking smartphone pie by offering advanced capabilities like 5G at the punchiest prices possible”.
CCS Insight forecasts that 5G-enabled phones will reach sales of 210 million units in 2020, a tenfold increase compared with 2019, with about half of the volume coming from China.
In 2024, sales of 5G phones are projected to hit 1.15 billion.