Driven by falling 5G prices and increasing 5G demand, smartphones are expected to reach their highest point this year since 2015, according to new research from International Data Corp. (IDC).
The smartphone market is forecast to reach 1.38 billion units in 2021, an increase of 7.7% over 2020. This growth will continue into 2022 with year-over-year growth expected to be 3.8% with shipments totaling 1.43 billion units.
5G is expected to become the dominate generation of smartphones begging in 2022. Source: IDC The growth is coming as markets migrate to 5G. With networks deployed globally, there is a growing demand for mid-range and low-end 4G phones following last year’s pandemic slowdown.
However, through 2025, 5G will take a greater market share of smartphone shipments. 5G shipments are expected to grow nearly 130% in 2021, with nearly all regions outside of China seeing triple-digit growth by the end of this year. But long-term, China will lead the way with nearly 50% share of 5G shipments in 2021 while the U.S. will follow with a 16% share. Other regions will combine for a 23.1% share of worldwide 5G market by the end of 2021.
"Smartphones are seeing competition for consumer spending from adjacent markets like PCs, tablets, TVs, and smart home devices, yet that hasn't slowed the market's path to recovery," said Ryan Reith, program vice president at IDC. "The smartphone market returned to growth during the holiday quarter last year and since then we've only seen production from top suppliers ramp up.”
As prices for 5G phones drop 12% year-over-year in 2021 to $456 and then below $400 in 2022, higher priced phones will be pressured to drop prices likewise.
"Although the 7.7% growth will feel like an impressive market turnaround, we must keep in mind that we are rebounding from one of the most challenging years on record," said Anthony Scarsella, research manager at IDC. "2021 will represent the largest year-over-year growth the market has witnessed since 2015, as the shift towards 5G across all price tiers continues to accelerate. The 5G shift will also deliver peak smartphone ASPs in 2021 ($376, up 9.7% year over year) when compared to the remainder of the forecast period as costly 5G devices continue to replace LTE devices, which are also starting to drop in price, down 27% in 2021."
The full research can be found in IDC’s Worldwide Quarterly Mobile Phone Tracker.
