5G expands to more affordable phones as chip prices fall

5G is increasingly available in cheaper phones, making faster mobile services affordable for low-income consumers around the world, according to market research.

Key to this expanded access to 5G service is lower prices for the specialized semiconductors needed for 5G phones, a trend that analysts say will continue over the next two years. The lower price makes it economically feasible to install the chips in a wider range of phones.

Already, 5G technology has moved beyond the high-end smartphone market, where devices sell for $550 or more, to the middle market where devices sell for between $250 and $550, and even cheaper 5G phones are available. available in some locations, says Jeff Fieldhack, research director. at Counterpoint Research.

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5G technology is “moving downward in terms of affordability very quickly, faster than any previous generation,” says Frank Boulben, consumer group chief revenue officer at Verizon Communications Inc.. In Asia, prioritization 5G chips by chipmakers in China and Taiwan is driving down chip prices and boosting production of low-budget 5G-enabled devices, says Neil Shah, vice president of research at Counterpoint.

The average price of a so-called 5G system-on-chip that performs multiple functions is now $40 to $45, according to Counterpoint. That price could reach $20 by the end of this year or early next year, in which case it would make economic sense for more mobile phone manufacturers to install 5G chips in devices with a retail price of about $150, says Fieldhack.

Airlines canceled some flights ahead of the rollout of new 5G wireless service, even after Verizon and AT&T agreed to limit signal around US airports. The FAA says the service could affect aircraft safety systems, a claim the wireless industry denies. Photo: Justin Lane/Shutterstock

US carrier Consumer Cellular Inc. plans to offer a 5G phone priced at $199 by June and another priced at around $150 early next year, according to Greg Hughes, vice president of the company’s portfolio strategy. Currently, the company offers 5G-enabled phones priced at $349 and up. Mr Hughes says he expects consumer adoption of 5G to increase when the technology becomes available in low-cost smartphones.

Globally, 5G capability will expand to at least 80% of phones priced below $200 in the next two to three years, up from less than 5% currently, says research analyst Runar Bjørhovde to the market research firm Canalys.

A total of 42% of smartphones shipped to retailers worldwide in 2021 were 5G-enabled, according to Counterpoint. That percentage is expected to increase to 54% this year and 66% next year, according to Counterpoint. In the United States, 58% of smartphones shipped to retailers were 5G-enabled last year, and that percentage is expected to increase to 83% by the end of this year and 89% by the end of 2023, according to Counterpoint. .

Mr. Bhattacharyya is a reporter for the Wall Street Journal in Philadelphia. He can be contacted at [email protected]

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