Saktanong - stock.adobe.com
Coronavirus, global economic slowdown to cap 5G smartphone sales in 2020
First half of 2020 will likely be much weaker than expected for the 5G smartphone market, but a strong bounce-back is possible in second half of the year if the coronavirus spread is brought under control
Having already forced Apple to warn of reduced iPhone production volumes, the novel coronavirus will have a much broader effect on the smartphone market as a whole.
According to Strategy Analytics, the novel coronavirus will see 5G phone shipments hit a lower-than-predicted target of 199 million in 2020.
In its assessment of the market at what could be a hugely significant momentum in the evolution of the 5G arena, Strategy Analytics noted that the global 5G smartphone industry was growing quickly.
However, it added that that the Covid-19 outbreak was currently restricting smartphone production in Asia, disrupting supply chains, and deterring consumers from visiting retail stores to buy new 5G devices in some parts of China.
On 18 February, in an advisory to investors, Apple revealed that following the end of the extended Chinese New Year holiday on 10 February, it was experiencing a slower return to normal conditions than it had anticipated. As a result, Apple does not expect to meet the revenue guidance previously provided for the March quarter.
This is down to two main factors. First, although its iPhone manufacturing partner sites were located outside the Hubei province, where the Covid-19 outbreak began, and although all its facilities had now reopened, the factories were ramping up more slowly than Apple had anticipated. The result is that iPhone supply shortages will “temporarily” affect revenues worldwide.
Second, Apple said that demand for its products in China has been affected by the events, with all official Apple stores, and those of its designated partners, closed.
With these dynamics in mind, Strategy Analytics predicted that the first half of 2020 will likely be much weaker than expected for the 5G industry, but that it expected a strong bounce-back in the second half of the year if the coronavirus spread was brought under control.
If realised, the 199 million 5G smartphone unit shipments predicted by the company for 2019 would mean that the market would have grown tenfold in a year and that the 5G segment would be the fastest-growing part of the worldwide smartphone industry this year.
It added that consumer ultimately wanted faster 5G smartphones to surf richer content, such as video or games. Strategy Analytics forecasted 5G penetration to rise from 1% of all smartphones shipped globally in 2019 to 15% in 2020.
The analyst saw China, the US, South Korea, Japan and Germany as the largest 5G smartphone markets in 2020, together making up 9 in 10 of all 5G smartphones sold worldwide over the year.
It noted that other important regions, such as India and Indonesia, were lagging behind and will not be offering mass-market 5G for at least another year or two.
Yet these predictions were based on a degree of optimism that the virus could be controlled. Giving its take on the potential for disruption in the technology industry caused by the coronavirus in 2020, Canalys expected supplies to normalise by the third quarter of 2020.
Looking at the global PC market, it said that the best case scenario was that the market shark by 3.4% over the course of 2020, but that the worst case was that it fell by 8.5%.
Read more about coronavirus and the IT industry
- Samsung and Huawei dominate the 5G device market in 2019, but analyst warns that expected and necessary competition could be curtailed by the current coronavirus outbreak.
- With coronavirus cases now reported across the world, Emotet campaigns are exploiting legitimate fears to compromise their targets.
- The coronavirus is making pandemic planning a business issue, once again. The last time businesses had to consider this problem was in 2009, with the H1N1 virus.