5G adoption is rapidly growing around the world. According to the Mobile Economy Report by GSMA, the total number of 5G connections in the world is set to surpass 1 billion in 2022 and 2 billion by 2025. 5G has also emerged as a key factor in the handset market, and is predicted to transform the current mobile behaviour of consumers. In India, wide-scale 5G networks are on the cusp of being rolled out. This is pushing smartphone brands to la­un­ch more 5G-enabled handsets. Smart­phones with advanced 5G processors are rapidly capturing consumer mindshare, especially in the affordable and mid-range segments. In these segments, 5G processors have been coupled with features such as enhanced battery life, fast charging technologies and better camera quality.

Almost half of the respondents to Oo­kla’s Consumer Survey claimed to already have a 5G-capable handset. With the tra­nsformational impact of 5G becoming mo­re evident to the Indian masses, more us­ers will be prompted to equip themselves with 5G handsets in the coming years.

Market snapshot

According to a report by Counterpoint Research, the global sales penetration of 5G handsets reached 51 per cent in Jan­u­ary 2022, surpassing the penetration of 4G handsets for the first time. In India, the share of 5G smartphones in overall shipments surged from three per cent in 2020 to 18 per cent in 2021 and 29 per cent in 2022, mainly because most new phones in the mid and upper-mid segment support 5G. A record 10 million 5G handsets were shipped in the second quarter of 2022. Wi­th this, the total 5G smartphone penetration in India has crossed 50 million since the launch of the first 5G smartpho­ne in 2020, compared to the total smartphone base of 550 million. This is expected to increase to 90-95 million shipments, with 5G smartphone penetration covering 15 per cent of the total smartphone base.

Meanwhile, a separate report by Co­un­terpoint Research reveals that the current average selling price for 5G smartphones is Rs 33,6000, which is expected to fall as players introduce more affordable 5G handsets in 2023.

Demand and affordability

Demand for 5G handsets has registered monumental growth in India. According to a report by Deloitte, the country will have 1 billion smartphone users by 2026. 5G-enabled devices will account for 80 per cent of devices sold, with Indian consumers purchasing 840 million 5G handsets, valued at $130 billion, over the next five years. De­mand is also expected to rise in Tier I and Tier II cities due to a high concentration of young, tech-savvy citizens.

On the other hand, 5G handset prices have gradually been falling since the technology was launched. However, choices in the budget segment remain limited. At present, the lowest-priced 5G handset is offe­r­ed by Redmi, at Rs 12,000. However, in­tense competition among original eq­ui­p­ment manufacturers (OEMs) and the av­a­ilability of cheaper 5G chipsets are expected to push down prices. The launch of more 5G handsets in the budget segment will further boost demand in the category.

Key players and products

Manufacturers launched 5G handsets in India even before the availability of the network and continue to introduce more 5G products to democratise the new network in the country. A look at some key players in the market:

Realme

Realme was the first brand to launch a 5G-enabled smartphone in India in 2020, with the launch of the Realme X50 Pro 5G with a Snapdragon 865 processor. It remained the fastest growing brand among the top five OEMs with a year-on-year growth of 23 per cent in the second quarter of 2022. Realme claims to have transitioned over half of its portfolio to 5G and converted 90 per cent of its R&D to develop 5G te­chnology. It is currently working on inc­reasing the production of 5G smartphones within the Rs 10,000-Rs 15,000 segment. Models offered by the brand include the Realme GT series, Realme GT 2 series, Re­alme X7/X7 Max/ X7 Pro, RealmeNarzo 50 5G, RealmeNarzo 30 5G, Re­al­me 8/8s/8 Pro 5G and Realme 9/9 Pro 5G.

Xiaomi

Although Xiaomi continued to be the leader in the smartphone market, its shipments dipped by a significant 28 per cent year-on-year in the second quarter of 2022. This was primarily attributed to component shortages, inflation and intensifying competition. However, 5G handsets comprised 25 per cent of Xiaomi’s overall shipments, and the brand plans to offer 5G devices across all feasible price points. Xiaomi’s 5G phones in the market include the Xiaomi 12-series, the Xiaomi 11-series, the Mi 10-series, Redmi Note 11 Pro+, Redmi Note 11T and Redmi Note 10T.

Samsung

Samsung led the 5G segment with 46 per cent of its shipments being 5G smartphones in the second quarter of 2022. The brand claims that its devices support the broadest variety of 5G bands in India and across the world. Samsung plans to launch more device options beyond the high-end segment and introduce 5G connectivity to a wider range of entry-level devices. Some of its available models are the Galaxy S-series (S20 and above), Galaxy S20 FE 5G, Galaxy S21 FE 5G, and select A-series and M-series models.

Vivo

Vivo was the second largest 5G smartphone player in the Indian market in the second quarter of 2022, with 33 per cent of its smartphones being 5G-enabled. The new launches in Vivo’s sub-brand iQOO propelled the brand’s online share. The 5G models currently offered by Vivo are V21, V21e, the V23-series, the T1-series, the X60-series, the X70-series and the X80-series, as well as the iQOO 9 series, the iQOO 7-series, iQOO Z5, iQOO Z6 and iQOO Z6 Pro.

OPPO

OPPO released Reno 5G in Switzerland in May 2019, making it the first commercially available 5G handset in Europe. In India, OPPO set up its first 5G innovation lab in December 2020 to deepen the development of core technologies for its 5G network. OPPO’s 5G models in the market include the Reno 8 series, the Reno 7 series, the Reno 6 series, and select Oppo A-series, K-series and F-series phones.

Other market players offering 5G handsets in India include OnePlus with the OnePlus 8-series, the OnePlus 9 se­ri­es, the OnePlus 10-series and the OnePlus Nord-series; Apple with the iPhone 12 series, the iPhone 13 series and iPhone SE 2022; and Poco with Poco F4 5G, Poco M4 5G and Poco M4 Pro 5G.

Challenges and future outlook

The handset industry has been plagued by several impediments. In 2021, the challenges primarily concerned supply constraints, which have now eased substantially. However, contraction in consumer demand owing to inflationary stress as well as elevated input costs, leading to higher market prices, has become an issue for the industry in 2022. This is translating into increasing inventory cycles across brands and channels. The International Data Corporation India forecasts that a tapering of overall demand and restricting the price of 5G handsets to above Rs 15,000 is likely to dampen the uptake of 5G handsets in the near future.

Nonetheless, the completion of auctions and the anticipated roll-out of 5G services in India have sparked optimism for 5G handset shipments. Commercial availability of 5G networks will prove to be an inflection point that will drive handset sales. Moreover, with diminishing supply constraints, 5G handsets can possibly be priced at under Rs 10,000 in 2023. This can spur wider adoption of the technology in the country. Another factor contributing to the shift towards 5G is the allocation of greater capacity to 5G chipsets by chipset manufacturers, with 4G chips facing supply shortage. The industry looks bullish, as the third quarter of 2022 is expected to witness a rise in demand for 5G handsets owing to online sales and festive offers.

Counterpoint Research forecasts that India will have 70-80 million 5G handsets by the end of 2022, as brands are doubling down on next-gen technology and aiming to push more smartphones in the Rs 10,000-Rs 15,000 bracket to attract a larger segment of consumers. According to analysts, 5G smartphones will account for nearly 35 per cent of the total smartphone shipments in India by the end of 2022. The figure will rise to 53 per cent by the end of 2023.

Going forward, more technological innovations by smartphone OEMs are anticipated in the next phase of the evolution of 5G devices. They will offer more lightweight and visually appealing form factors, housing powerful chipsets, without compromising on the quality of ex­peri­ence. As competition intensifies with newer ch­oi­ces and innovations, market pl­ay­ers will be devoting most of their reso­u­rces to the development of cutting-edge and aesthetic 5G portfolios powered by advanced processors. The production-lin­ked incentive pa­ck­age of Rs 760 billion announced by the government to boost domestic semico­nductor manufacturing will further bolster handset manufacturing in the country.