Is 5G Smartphones Demand Lower Than Expected?

for 5G smartphones

If 2019 is the first year of 5G commercial use, then 2020 will be a year when 5G smartphones are gradually becoming popular. According to the previous report issued by the China Academy of Communications, domestic shipments of 5G smartphones reached 13.77 million last year. This year, market demand will increase further and is expected to reach 200 million.

Qualcomm for 5G smartphones

However, the actual situation may not be so optimistic. Guo Minghao said that the total demand for 5G smartphones this year will be lower than expected. And the replacement demand for high-end 5G smartphones will be significantly lower than manufacturers’ expectations. In order to control the price of 5G phones and promote market replacement, Qualcomm has reduced the price of its 5G chip Snapdragon 765 by about 30%. Its current price is $40.

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5G Smartphones Will Use Qualcomm or MediaTek Chips?

In contrast, MediaTek’s 5G chip Dimensity 1000 is currently priced at $60-70, of which the cost is $45-50. The price of Dimensity 1000L is slightly lower. But if it is sold at $40, it will inevitably affect the margin of MediaTek 5G chips.

After Qualcomm’s price reduction, it is expected that many manufacturers will switch models originally planned to use MediaTek to Qualcomm. This will affect about 20-25 million 5G smartphone chip orders, and the order transfer is expected to begin in February.

MediaTek Dimensity 1000 for 5G smartphones

Although the performance of the MediaTek Dimensity 1000 is much higher than that of the Qualcomm Snapdragon 765, the performance gap is mainly reflected in the game, and the difference is small in daily use. When it comes to the flagship smartphone market, everything changes. The price of the Qualcomm Snapdragon 865 + X55 baseband will remain at $120 – $130. But it will still be the only choice for flagship Android phones. Therefore, in order to regain the high-end market, sacrificing profit margins seems to be the only option for MediaTek.

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