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5G adoption to rise but may increase overall smartphone prices in India

5G adoption to rise but may increase overall smartphone prices in India
Photo Credit: Pixabay
7 Mar, 2022
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The adoption of 5G-enabled smartphones in India is expected to more than triple and account for 40% of the overall shipments this year as opposed to just 12% in 2021, according to a report by international market research firm, Gfk.

However, the increase in these 5G-enabled handsets could simultaneously result in spiking the overall price of handsets sold in the Indian smartphone market in 2022, the report added, pointing out that 5G handsets were priced at 117% more than the average selling price — of Rs. 15000 — in India this year.

In February, Counterpoint Research reported that India shipped over 10 million 5G smartphones in 2021 for the first time, growing at 555% YoY. Total smartphone shipments last year stood at 169 million, growing at 11% YoY.

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Kartik Vasudevan, strategic accounts director, India, at GfK, said the Department of Telecom’s (DoT) decision to conduct 5G spectrum auctions this year, has spurred interest in 5G devices as consumers want to “future proof” their devices. “5G enabled handsets will play a key role as India gets ready to roll out 5G services in the near future,” he added.

According to Faisal Kawoosa, founder and chief analyst at market research firm techARC, while consumer interest in 5G devices has been growing, chipmakers are also pushing brands to use 5G chips in their new line-up of smartphones. “Chipmakers are not encouraging brands to buy 4G chips. They are offering them incentives to switch to 5G chips,” he said.

The pandemic-led supply chain disruption triggered a shortage of semiconductors in 2020 impacting multiple sectors. Though the supply has started to ease, the chipmakers are still struggling to meet industry demand.

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Kawoosa explained the shortage is irrespective of 5G or 4G, but chipmakers are giving priority to 5G chips, and allocating more resources to them. “Producing for a single tech is in their benefit as it gives them higher economies of scale," he added.

In addition to the push from chipmakers, the growing adoption of 5G chips can also be attributed to brands wanting to stay relevant and flaunt new features amid rapid market saturation. “It (5G) has also given brands something to talk about and promote their products as the latest in the industry to support 5G technology. Most brands want to show they have the latest technology,” adds Kawoosa.

Qualcomm, for instance, unveiled a new 5G modem that leverages artificial intelligence (AI) to optimize 5G performance on smartphones, at the MWC 2022 last week. According to GfK’s Vasudevan, the true potential of 5G is yet to be released. “5G will be very important to drive some of the latest technologies of voice and camera applications which would be artificial intelligence (AI) driven,” he said.

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