5G – September
There has been little positive to say about the smartphone market this year, and as 3Q data comes out over the next few weeks, we have little hope that there will be any meaningful improvement, other than on a company specific basis, with expectations for a 3rd consecutive quarter of declining sales. While 5G is a subset of smartphones sales and shipments, the segment continues to grow on an absolute basis with 5G smartphone device offerings growing 4.8% in September, up 65.8% y/y and up 41.2% YTD. China however has been seeing a more difficult smartphone situation this year, with cumulative shipments through July down 23.0% over the same period last year, while 5G smartphone shipments on the Mainland are down 17.8% over the same period. While we would not categorize China’s 5G market as ‘mature’, 5G in key cities has been available for some time and we expect the slow growth this year, indicates that China’s 5G smartphone growth has begun to fall into the category where it is more greatly affected by the smartphone market globally and in China than it has in the past, and with a ~60% 5G subscriber rate the days of ‘early adopter’ momentum are likely over.
On a global basis however, 5G is still progressing, with September data indicating m/m growth in almost all major categories as to device offerings and vendor growth. We note that we expect form factor growth, while up 9.1% YTD, to remain relatively flat for the remainder of the year, as it represents new 5G devices categories, many of which have already been developed. The number of new 5G vendors has seemingly leveled off at roughly 1.5% for the last few months, which translates to 3 to 4 new 5G vendors each month (over 200 now), but given the large number of vendors already involved in the 5G market, we expect to see relatively little growth in that category going forward.
More import however is the growth in 5G smartphone device offerings, which, as of September, total 1,579 of which 867 are smartphones. As can be seen in Figure 2, overall 5G device growth has continued through the year, with smartphones leading that growth, up 41.2% YTD and 65.8% y/y and 333.5% over two years. CPE (Customer premise equipment) devices, which would be the equivalent to the ONT (Optical Network terminal) box that connects fiber from outside to your modem and router, is helpful in understanding carrier adoption of 5G as an FWA (Fixed Wireless Access) product that can be used in a home or office, which would compete with fiber or cable, a much more ‘emerging’ market than 5G mobile. FWA is expected to account for ~20+% of all mobile network traffic by 2026, so while the growth is has been relatively slow as 5G is being built out, we expect the number of offerings to continue to increase as the user base grows.
All in September for 5G seems to have held up better than almost any other aspect of the smartphone market, and while it is still affected by the overall smartphone specific and global macro environment, carriers in developed countries continue to roll out coverage and add 5G subscribers, with governments in other countries now beginning to allocate b5G bandwidth to local carriers. We expect 5G growth globally to continue based on C-band auctions, as C-band spectrum represents a tradeoff between lower performing 5G bands that have vast coverage and high frequency bands that travel very limited distances. As C-band is an attractive alternative, we watch the proliferation of C-band auctions and deployment around the globe to better understand the potential growth in 5G subscribers. As such we remain optimistic that 5G is still in an a growth stage globally, and that while the overall smartphone market is a product of the macro environment, 5G growth is only partially affected by those factors and will continue to grow as countries begin or continue to grow their carrier and customer bases over the next few years.
On a global basis however, 5G is still progressing, with September data indicating m/m growth in almost all major categories as to device offerings and vendor growth. We note that we expect form factor growth, while up 9.1% YTD, to remain relatively flat for the remainder of the year, as it represents new 5G devices categories, many of which have already been developed. The number of new 5G vendors has seemingly leveled off at roughly 1.5% for the last few months, which translates to 3 to 4 new 5G vendors each month (over 200 now), but given the large number of vendors already involved in the 5G market, we expect to see relatively little growth in that category going forward.
More import however is the growth in 5G smartphone device offerings, which, as of September, total 1,579 of which 867 are smartphones. As can be seen in Figure 2, overall 5G device growth has continued through the year, with smartphones leading that growth, up 41.2% YTD and 65.8% y/y and 333.5% over two years. CPE (Customer premise equipment) devices, which would be the equivalent to the ONT (Optical Network terminal) box that connects fiber from outside to your modem and router, is helpful in understanding carrier adoption of 5G as an FWA (Fixed Wireless Access) product that can be used in a home or office, which would compete with fiber or cable, a much more ‘emerging’ market than 5G mobile. FWA is expected to account for ~20+% of all mobile network traffic by 2026, so while the growth is has been relatively slow as 5G is being built out, we expect the number of offerings to continue to increase as the user base grows.
All in September for 5G seems to have held up better than almost any other aspect of the smartphone market, and while it is still affected by the overall smartphone specific and global macro environment, carriers in developed countries continue to roll out coverage and add 5G subscribers, with governments in other countries now beginning to allocate b5G bandwidth to local carriers. We expect 5G growth globally to continue based on C-band auctions, as C-band spectrum represents a tradeoff between lower performing 5G bands that have vast coverage and high frequency bands that travel very limited distances. As C-band is an attractive alternative, we watch the proliferation of C-band auctions and deployment around the globe to better understand the potential growth in 5G subscribers. As such we remain optimistic that 5G is still in an a growth stage globally, and that while the overall smartphone market is a product of the macro environment, 5G growth is only partially affected by those factors and will continue to grow as countries begin or continue to grow their carrier and customer bases over the next few years.
5G Ecosystem - Primary Indicators - Source: SCMR LLC, GSA.com
Selected 5G Devices - Source: SCMR LLC, GSMA
5G Smartphone Unit Volume & ROC - Source: SCMR LLC, GSA.com
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