Historically, new wireless generation adoption tended to follow a classical adoption curve which spans many years. Over time, early-adopters help drive the value proposition of the new technology and aided by Moore’s Law and design maturation move the industry along as the new generation products becomes mainstream products. This was evident in the 3G/LTE transition [if we discount the coinciding explosive smartphone growth]. LTE was initially designed into only the most expensive devices and only after about three design cycles later did it finally become mainstream as the chipset matures to a point where cost premium of LTE began to fades away.
Fast forward to today (Q3 2019), multiple 5G smartphone designs are already shipping into the various global 5G markets with first-generation 5G modem designs while the second-generation designs are being readied for launch at the end of 2019. The latest announcements from Qualcomm, Samsung and HiSilicon on their integrated apps processor and 5G modem chipsets at IFA2019 (along with existing versions previously announced from Mediatek and UNISoC) indicate that in 5G, the industry is poised to see an even faster adoption of 5G capabilities as we move into 2020 – only the second year of commercial 5G!
So why the optimism? In a maturing industry, common wisdom points to slowing pace of design innovations and consolidation of OEM brands. The wireless carriers, just earlier this year, seemed hard-pressed to come up with viable business models around selling 5G services. These factors were considered when making initial forecasts of future devices sales. However, there is something truly unique with 5G that will present a situation where device hardware development leaps ahead of network deployments. The key to that observation is the accelerated rate of price erosion expected for essential 5G hardware. Essentially, 5G designs will replace LTE designs as the de-facto mainstream device standard in about four to five years’ time as the chipset industry pushes the rate of modem / RF integration and component cost savings.
With the new revised 5G forecast, it is expected that 5G handsets will become half the volume shipments in slightly more than four years – that is a full year sooner than LTE transition from 3G. Key milestones in 2020 would be the deployment of 5G networks in China, the world’s largest smartphone market. The sheer scale of the SA 5GNR deployment by China Mobile alone will be staggering and expected to tip the industry towards a 5G future.
Industry forecasts are as good as the information available. Previously, our expectation of the commodity pricing tells us that 5G components will behave a certain way. However, the new information from the leading chipset makers is changing our views of 5G handset growth.