Review: China ranks first in 5G mobile phone sales, is the world happy too?

After the Spring Festival of the Year of the Ox, the new year for Chinese people has truly begun. Looking back at the rapid development of 5G mobile phones in China last year, it led the global trend.

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According to IDC data, in 2020, the total global market 5G mobile phone shipments were about 326 million units, of which China's 5G mobile phone shipments were about 167 million units, accounting for more than 50% of the world. According to the Global System for Mobile Communications Association, it is predicted that by 2025, the number of global 5G users will reach 1.8 billion, and China will account for nearly 45%. In other words, the Chinese market will become the world's largest 5G market in the future.

With the advent of the 5G era, the world is ushering in a new round of "mobile phone replacement wave". The vigorous development of China's 5G technology has pushed the global related industrial chain into the "reform" stage one after another. The question then arises, why is China's 5G mobile phone sales leading the world? What positive impact does this bring to the global 5G development?

Three ways for China’s 5G mobile phones to take the lead

At present, China has occupied an absolute dominant position in the global 5G mobile phone market. As early as 2003, Huawei had begun early research on 5G technology; by 2019, major domestic mobile phone manufacturers have successively released 5G mobile phones. In the past two years, a large amount of R&D investment by domestic mobile phone manufacturers has entered into the development of 5G technology. All these efforts have not been in vain. According to a statistical data from IPlytics in July last year, at that time, Chinese companies accounted for 34% of the global 5G standard essential patent (SEP) declarations, ranking first in the world.

The continued surge in R&D investment is inseparable from the positive feedback of market development. The reason why Chinese 5G mobile phones are at the "leading" level is mainly due to the following three aspects:

1. Targeting users’ differentiated pursuits, we will accurately achieve product coverage; According to data released by IDC, China’s smartphone market shipments in the fourth quarter of 2020 were approximately 86.4 million units, a slight increase of 0.3% year-on-year. The overall shipments for the whole year of 2020 were approximately 326 million units, a year-on-year decrease of 11.2%. In the fourth quarter, domestic 5G mobile phone shipments were approximately 60 million units, and the cumulative shipments for the whole year of 2020 were approximately 167 million units, accounting for more than 50%.

The editor believes that the success of my country's 5G market is closely related to the full-dimensional layout of products by my country's mobile phone manufacturers. In the past two years, mobile phone manufacturers have launched 5G mobile phones based on the diversified and differentiated segmentation needs of consumers, achieving precise coverage of various consumer groups.

Take Huawei as an example. In the first half of 2020, Huawei released a variety of models, including its low-end models - Huawei Enjoy Z, Huawei Enjoy 20 Pro, etc.; mid-to-high-end models - Huawei Nova7 series; flagship models - Huawei P40 series and Huawei Mate Xs, etc. The entire 5G mobile phone product line has achieved perfect coverage from thousands of yuan to more than 10,000 yuan, providing a variety of models for different users to choose from.

The same is true for Xiaomi, Redmi, OPPO, and vivo. Their 5G mobile phones at various prices allow people of all kinds to buy suitable 5G mobile phones, making them the first in the world to enter the 5G era.

2. China's 5G base stations are vigorously promoted, providing a foundation for the development of 5G mobile phones. Looking at the entire communications market, China is currently the world's largest communications market, among which China Mobile, China Unicom, and China Telecom are the world's largest in various mobile communication networks. Their promotion of 5G network construction has laid the foundation for the development of the domestic 5G market. According to the Ministry of Industry and Information Technology, by the end of 2020, my country had opened more than 718,000 5G base stations, achieving full coverage of 5G networks in all cities above the prefecture level across the country, and the number of 5G terminal connections exceeded 200 million.

However, there are also problems. For example, I changed to a 5G phone and activated a 5G package. However, because I live in a small city outside the third-tier cities, the 5G network has not yet been "activated". Even in super first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, many friends who have activated 5G packages do not have a deep understanding of 5G. Nowadays, applications that are suitable for 5G or can bring out the value of 5G networks are very scarce. The promotion of 5G base stations has only laid the foundation. If there is no follow-up of related applications, it is still difficult for consumers to truly experience the so-called revolutionary changes brought about by 5G.

3. The boost of 5G chips has promoted the popularization of thousand-yuan mobile phones; when the 5G network was first laid, the average selling price of 5G mobile phones was very high, so the sales volume of mobile phones did not increase much. In 2020, the price of 5G mobile phones began to drop continuously. According to the Economic Daily, in the first anniversary of 5G commercial use, the price of 5G mobile phones has dropped from the previous high-end 5,000 yuan range to the entry-level 1,000 yuan range. During the Double Eleven period, some manufacturers even lowered the price to 999 yuan. This is inseparable from the launch of mid- and low-end 5G chips by major mobile phone chip manufacturers.

Recently, Qualcomm announced that it will soon launch an entry-level 5G chip, the Snapdragon 480. According to Qualcomm, this chip is built with an 8nm process. As an upgraded version of the previous Snapdragon 460, the CPU performance has increased by 100% and the AI ​​performance has increased by 70%. In addition, on November 10, 2020, the chip manufacturer MediaTek's Dimensity series of 5G chips also welcomed a new member, the Dimensity 700. The development of the Dimensity 700 is regarded by the outside world as MediaTek's "killer" product in the mid-to-low-end market.

The two entry-level 5G chips mentioned above directly bring the price of 5G mobile phones to around 1,000 yuan, which is conducive to the further popularization of 5G mobile phones.

Since 2020, Huawei, Xiaomi, OPPO, vivo and others have successively launched 5G mobile phones priced at RMB 1,000. The boost of 5G chips such as Snapdragon 480 and Dimensity 700 in the mid- and low-end markets has further accelerated the full-scale outbreak of RMB 1,000 models.

With the "decentralization" of 5G chip technology, 2021 will surely be a year of fierce competition for 5G mobile phones. However, with the above three "swords", I believe that China's 5G mobile phone market will still have a solid and unshakable position in the world in the future.

China's 5G is booming, will the global industry chain also boom?

Although most 5G mobile phone users do not know the value of 5G, as a new generation of communication technology, its positive significance to the world of science and technology cannot be ignored. Xiang Libin, Vice Minister of the Ministry of Science and Technology, once said that future mobile communication technologies represented by 5G will efficiently connect a series of infrastructures such as big data centers, artificial intelligence and industrial Internet, accelerate the realization of industrial technological transformation and optimization and upgrading with digitalization, networking and intelligence as the main offensive and defensive lines, and drive the development of the global industrial chain. So which industries will benefit from it?

First of all, the printed circuit board (PCB) industry may benefit the most. In recent years, the rapid popularization of 5G has brought broad room for growth to the PCB industry, and the global PCB industry is also growing. As a key interconnection component for electronic products and a substrate for loading various electronic parts, PCB plays an important role in consumer electronics, electronic product storage, data centers and other fields. In the tide of 5G technology development, the performance of the PCB industry is also continuing to rise.

Since 2019, most manufacturers have started mass production of 5G communication PCB products, which has led to a rapid growth in their revenue capacity. According to the financial report released by the PCB industry in 2019, Shenzhen Nan Circuit's net profit was 1.233 billion, a year-on-year increase of 76.8%; Shengyi Technology's net profit was 1.458 billion, a year-on-year increase of 45.73%; Shanghai Electric's net profit was 1.206 billion, a year-on-year increase of 111.41%.

At present, electronic products have continued to develop in the direction of "integration, intelligence, miniaturization, and lightweight". The market demand for electronic products is strong, which will further strengthen the development of the PCB industry.

Secondly, the development of 5G in China will inject new impetus into the global semiconductor industry. In the development of the semiconductor market, 5G plays an important role in promoting the market. The advent of the 5G era is accelerating the promotion of 5G mobile phones, and sales are also continuing to increase. Smartphones have become a powerful driving force for the development of the semiconductor industry. At the same time, the revenue of many chip manufacturers has also continued to grow, suggesting that the development prospects of the semiconductor market are good.

According to IC insights data, the top ten semiconductor companies in the world achieved a total revenue of US$72.487 billion in the first quarter of 2020, a year-on-year increase of 16%. During the same period, the growth rate of the entire semiconductor industry also increased to 7%. Among them, Huawei HiSilicon achieved revenue of US$2.67 billion in the first quarter of 2020, an increase of 54% over the same period last year, entering the top ten semiconductor companies in the world in terms of revenue for the first time.

Finally, the global smartphone supply chain has benefited from China's 5G. Due to the impact of the COVID-19 pandemic in 2020, the sales volume of the integrated mobile phone market has dropped significantly. It is worth noting that this is not the first time that the mobile phone industry has experienced a decline. According to data from the research agency IDC, global smartphone shipments have been declining for three consecutive years. In 2018, global smartphone shipments were 1.405 billion units, and in 2019, global smartphone shipments were 1.371 billion units. In the second quarter of 2020, global smartphone shipments reached 278.4 million units, a year-on-year decrease of 16.0%.

However, with the popularization of 5G networks, 5G mobile phones have become "hot sellers", with a significant boost in both average selling prices and sales. With the abundance of 5G models and further reductions in average selling prices, users' demand for 5G mobile phone upgrades will increase significantly in 2021.

Garter predicts that global smartphone sales will exceed 1.5 billion units in 2021, a year-on-year increase of 11.4%. The mature markets in Asia Pacific, Western Europe, and Latin America have shown the strongest year-on-year growth of 15.75%, 13.84%, and 15.51%, respectively. The recovery of users' willingness to switch to 5G and their spending power are the main driving forces behind the sales of the mobile phone market.

As an important driving force for the development of smartphones, 5G smartphones are saving the survival crisis of upstream and downstream manufacturers in the entire supply chain, and at least slowing down the pace of the decline of the smartphone industry. The slow development of 5G smartphones abroad is mainly due to the failure of 5G networks. With China as a "demonstration" in the front, the value of 5G smartphones will continue to be released for quite some time in the future.

Under Matthew's curse, some are happy while others are sad

With each iteration of mobile communication technology, a round of "reshuffle mode" will start in the mobile phone market. Now that 5G technology is becoming more and more popular, major mobile phone manufacturers have also begun to invest in technology research and development, fearing that they will miss the 5G wave and become abandoned by the times. Standing at the forefront of 5G technology, mobile phone manufacturers are catching up with each other, and the Matthew effect is gradually emerging.

According to the 2020 global smartphone sales statistics provided by research firm Counterpoint, Samsung unsurprisingly once again took the top spot, followed by Apple, Huawei, and Xiaomi. Samsung's total shipments in 2020 accounted for 19% of the total market, reaching 255 million units, but fell 14% year-on-year; Apple's total sales accounted for 15% of the total market, with sales of 201 million units, a year-on-year increase of 3%; Huawei ranked third with a total sales of 187 million units (falling out of the top 5 in the fourth quarter), accounting for 14% of the market share, a year-on-year decline of 21%.

From the above data, we can also see that Samsung, Apple, and Huawei, the three major mobile phone manufacturers, occupy almost half of the global market share. The remaining market has been divided up by Xiaomi, OPPO, vivo, etc., leaving less and less room for survival for other brands. In the wave of 5G, how many companies are rising against the wind, and how many companies are going with the wind.

In fact, other brands such as Meizu, Motorola, LG, HTC, OnePlus, etc. all launched their own smartphones in 2020, but their influence was very limited, and most of them were just for show.

Take LG mobile phones as an example. Previously, LG's business scope was quite extensive, and it had launched many classic models in the mobile phone business. However, since the advent of the 4G era, LG has begun to fall behind. According to past financial reports, LG's mobile business has been in a loss-making state for 23 consecutive quarters since the second quarter of 2015. As of the fourth quarter of 2020, the loss amount has reached 29.3 billion yuan. In addition, LG is also in a downturn in the overseas market, with only 2% market share, which is less than domestic brands such as Xiaomi, OPPO, and vivo.

As the 5G market matures, the requirements for smartphone capabilities will become higher and higher. In the Matthew effect, those who are not fit will eventually be eliminated. In the past two years, the smartphone market has been further concentrated in the hands of leading manufacturers, which is the best annotation of this problem. Under this Matthew effect, there is also a wave of fresh "blood" in the mobile phone market that wants to enter the market, but the opportunities are running out.

For example, in December 2020, Gree launched the Dasong 5G mobile phone named after its sub-brand. This phone is equipped with a Snapdragon 765G 5G chip, supports 8GB+256GB of memory, is equipped with a 6.81-inch FHD+ full screen and a rear 64-megapixel quad-camera. The price starts at 2,699 yuan. However, sales are extremely bleak. According to data from Gree's official mall, as of December 21, 15 days after its launch, the sales of Dasong 5G mobile phones on Gree's official website were 1,956 units, which is less than the sales of some Xiaomi models in one day.

Even compared with Redmi, which has almost the same configuration and grade, its sales volume is far less than the latter; in terms of chip configuration, Redmi K30, vivo Z6, Xiaomi 10 Youth Edition and Dasong 5G mobile phone are also equipped with Snapdragon 765G high-speed 5G chip, but the price is nearly 1,000 yuan cheaper than it. Although Gree has caught up with the first year of 5G, its sales volume is still somewhat unsatisfactory.

This also proves that although the iteration of mobile communication technology has brought some new opportunities to the mobile phone industry, it also brings more challenges. In this game, who will be the winner of this era remains to be seen. However, it is worth affirming that judging from the excellent performance of Huawei, Xiaomi, OPPO, and vivo in the market today, their position has been further consolidated, and it seems difficult for later players to shake this pattern.

In the past year, China's 5G has set a "rhythm" for global development, and the development of my country's 5G technology is currently at the top of the world. In the Year of the Ox, my country's 5G construction will continue to accelerate, and more cities will be able to connect to 5G networks in the future. In the 5G era, China will continue to take the lead, which will benefit the development of the entire global industrial chain.

Although we have not yet felt the true charm of 5G, this "advancement" is still an important symbol of China's growing scientific and technological strength.