Has the Race to Launch the First 5G Smartphone Begun?

During Huawei's annual Analyst Summit held in April, the company played down the role of 5G more than may have been expected. This cautious stance seemed to fly in the face of much of the current hype surrounding 5G and can be viewed as a reality check on the challenges that lie ahead for the introduction of the required networks and services across the globe. Indeed, during the summit, Huawei announced that the first 5G network rollouts would not occur until after 2019, while at the same time, it was pushing toward the continued use of LTE and its enhancements. This vision of 5G was mainly from a network perspective, so taking this as a starting point, ABI Research explores potential scenarios and launch date expectations for 5G smartphone models.

Although Huawei chose to downplay the immediate significance of 5G at the show, the company is nonetheless pushing ahead for the launch of a 5G smartphone sometime in the next 18 months. Tying in with its expectations for 5G network launches in 2020 suggests that Huawei’s first 5G device would arrive sometime during that year. However, it is expected that the first of its devices to carry the connectivity will be in its Mate, rather than its P series, as the company tends to showcase new technologies and chipsets in the Mate range first. Keeping this in mind, and taking current launch cycles of the Mate series, it would be of no surprise if Huawei launched its first 5G smartphone sometime around the October 2019 time frame.

In comparison, lead smartphone vendor Samsung is also expected to launch its first 5G smartphone sometime in 2019. In a similar vein to Huawei, it is expected that its Note model will carry the feature first, rather than the S range, which is likely to be around August of that year. Adding the feature to these second tier, lower volume flagship products seems a safer bet when it is quite possible that 5G networks may not be readily available in most markets.

A key issue regarding the integration of 5G for Apple will be how it segments its portfolio in the future following the launch of the iPhone X in 2017. Ideally, it would make sense for the vendor to use future iterations of the iPhone X to introduce new technologies and features, while leaving its standard range to continue carrying the majority of its volume and hitting the lower price tiers. If this is the approach that Apple takes, then it will probably take another two generations, so probably 2020 at the earliest, until 5G is seen in any of its iPhone devices. However, after this date and due to its yearly upgrade cycle, it is expected that 5G will quickly permeate all iPhone models, possibly within 2 to 3 years thereafter.

Qualcomm is leading the charge in the industry from a chipset perspective with the announcement of its X50 5G modem, with chipsets to be made available by the end of 2018. While Huawei and Samsung have ambitious plans to power their 5G smartphones using their own modems, Apple is lagging behind in terms of adopting the latest cellular technologies, and with 5G, there is little to suggest that this will be an exception.

Qualcomm has revealed that a number of industry leading companies have committed to support the chipset, including 18 OEMs, 18 mobile operators, and additional major infrastructure suppliers. A striking observation regarding the list of OEM partners was the absence of Apple, Samsung, and Huawei. Instead, Qualcomm has listed HMD Global (Nokia), HTC, LG, OnePlus, OPPO, Sony Mobile, Vivo, Xiaomi, and ZTE among the OEMs. While the vendors are all working to commercialize 5G mobile devices for launches due in 2019, it may also indicate that the addressable market for Qualcomm’s 5G modem could be restricted to use by these smaller OEMs.

Compared with the expected launch timings of 5G devices from Samsung, Huawei, and Apple, there is every possibility that second tier vendors will be first to market. They would, therefore, be the main benefactors of 5G in the short term, as early integration of 5G into smartphones could act as a key differentiator, offering the potential to gain share from the top three vendors. Based on past experience, it is conceivable that Sony will be among the first to launch a 5G device, having been ahead of the game with the launch of the first device with gigabit LTE and among the first to use Qualcomm’s Snapdragon 845 chipset, allowing 1.2 Gbps throughput and providing support for Cat 18 LTE. Other 5G device implementations, such as fixed wireless broadband consumer equipment and even smartphone modules, could hit the market as early as 2018, but these will be minimal in volume.

However, much of this early success by the Tier Two vendors will depend on the success of early implementations of the X50 modem. Many of these smaller device OEMs have little to no presence in many markets, including in the United States, suggesting that other markets, notably those in Asia, could be first to get their hands on 5G smartphones.

As Huawei has alluded, there is much to be done to make 5G a reality, both in the network and at the device level. The two major issues for 5G smartphones are the ability to build the technology into the device and the rollout of the 5G networks. The latter has the potential for becoming a “chicken and egg” scenario in which the vendors will be loath to launch smartphones when networks are not ready, and vice versa. However, there is an incentive for mobile operators to roll out networks and get as many 5G devices onto their networks as possible, as it aids with improving efficiencies, throughput, and costs. It may even spark a resurgence in operators offering subsidized 5G smartphone models in a bid to entice vendors and users to the service so that they can benefit quickly from utilizing the network. However, with the launch of 5G expected to be an “islands and seas” launch, in much the same way as 3G was introduced, rather than LTE networks, it will take some time to provide city-wide 5G coverage for enhanced mobile broadband (eMBB), so OEMs will initially be reluctant to include 5G technology in all flagship models.

Of greater importance to 5G smartphones is the increasing complexity of the RF front-end (RFFE) design, as the mobile device industry moves to these next-generation networks. The introduction of 5G requires new RFFE components and more processing capabilities for multiplexing, leading to their numbers increasing exponentially. Handset vendors, therefore, have to ensure that their devices are capable of integrating these high-end technologies, and their RFFE requirements, into smartphones without overly compromising time to market, price, performance, and power consumption. To aid with this transition, the RFFE needs component- and system-level innovation and integration, providing a full end-to-end antenna-to-modem design. However, aside from Qualcomm, no other chipset suppliers are offering such a highly integrated packaged RF solution, which means that, for many OEMs, it is a question of either partnering with Qualcomm or creating more collaboration and targeted integration in the RF industry. Failure to do so will mean that handset vendors face an uphill struggle to overcome the challenges that the RF poses when moving to 5G.

Many of these market drivers mean that the initial phase of 5G smartphone deployment looks like an opportunity ripe for the challenger vendors and, crucially, those that are seen to be engaging with Qualcomm. Expectations are that smartphones will start to become available during 2019, so it is anticipated that, by 2022, all major vendors will have at least one high-end model that is 5G ready. Any significant delays could prove disastrous, notably at a time when it is crucial for OEMs to stay competitive, as the smartphone market is maturing and enduring cutthroat competition. Moreover, it is this migration to next-generation networks that vendors are pinning their hopes on for creating a much needed market boost to stimulate upgrade and replacement cycles.

As the major models from Samsung, Huawei, and Apple are added to the list of available 5G smartphones during these formative years, shipments will be boosted significantly. Combined, these three vendors account for more than 50% of total smartphone shipments and more than 80% of the premium smartphone segment, which would ultimately represent the main addressable market for 5G, at least in these early stages of deployment. Based on many of the assumptions outlined above, ABI Research’s initial expectations are for 5G smartphone shipments to reach 410 million by 2022. Much like the launch of 3G, ABI Research also expects a disconnect to occur between smartphone shipments and 5G subscriptions, possibly running at a 3:1 ratio, even by 2022, as vendors look to improve economies of scale and minimize regional variants, despite the expected lack of widespread 5G network availability and any associated connection to their data plans.