As the prices of 5G mobile phones and packages continue to decline and the construction of 5G networks continues to accelerate, the penetration of the domestic 5G mobile phone market continues to increase this year, and shipments reached an all-time high in May, accounting for nearly half of the market.

A reporter from Securities Times e Company has learned that at present, domestic sales of 5G mobile phones are generally better than market expectations, and the 5G replacement trend is a gradual process, mainly in the middle and high end in the first half of the year. with the recent 5G mobile phones entering the 1500 yuan stall, 5G packages plummeting to 89 yuan, etc., the second half of the 5G replacement wave has begun, 5G mobile phones are accelerating to the middle and low end, and the large-scale popularization of 5G mobile phones is not far away.

Accelerated penetration of 5G mobile phones

Recently, the China Information and Communication Institute under the Ministry of Industry and Information Technology released a report on the operation of the domestic mobile phone market in May, showing that in May 2020, the domestic mobile phone market shipped 33.759 million units, down 11.8% from January to May last year, and the domestic mobile phone market shipped a total of 124 million units, down 18.0% from the same period last year. In May this year, 32 new models of mobile phones were launched in China, down 22.0% from the same period last year. From January to May, a total of 169 new models were launched, down 18.8% from the same period last year.

The other side of the continued decline in the domestic mobile phone market is the continued increase in the penetration of 5G mobile phones. According to the report, 15.643 million 5G mobile phones were shipped in the domestic market in May 2020, accounting for 46.3 percent of mobile phone shipments in the same period, and 16 new models were on the market, accounting for 50.0 percent of the number of new phones on the market in the same period. This means that, no matter in terms of shipments or the release of new models, domestic 5G mobile phones have accounted for half of the market.

A reporter from Securities Times e Company found that from January to May this year, domestic 5G mobile phone shipments were 5.465 million, 2.38 million, 6.215 million, 16.382 million and 15.643 million respectively, accounting for 26.3%, 37.3%, 28.6%, 39.3% and 46.3% of the total domestic mobile phone market shipments in that month, respectively. Since the beginning of this year, domestic 5G mobile phone shipments have shown an overall upward trend, the penetration rate has been increasing, and reached an all-time high in May.

Overall, from January to May this year, the domestic market shipped 46.084 million 5G mobile phones and 81 new models on the market, accounting for 37.0% and 47.9% respectively.

"at present, China is adding more than 10, 000 5G base stations every week, and by the end of the year, the number of 5G base stations in China will exceed 600000. With the improvement of 5G network coverage throughout China, 5G mobile phones have reached a stage of rapid popularity in the second quarter. As for the current popularity of 5G, Zhao Ming, president of Glory, told the Securities Times e Company reporter.

Sales of 5G handsets are better than expected

Affected by the COVID-19 epidemic, the industry generally expected that domestic mobile phone market shipments were not optimistic for the whole year, and domestic smartphone shipments were about to decline for three consecutive years, so the replacement trend of 5G mobile phones would also be postponed.

However, a reporter from Securities Times e Company learned from a number of mobile phone companies that although the domestic 5G replacement trend is not as fierce as expected because of the epidemic, the 5G replacement trend continues, and at present, the sales of new 5G mobile phones launched by many mobile phone companies are generally better than market expectations.

"sales of 5G mobile phones are still higher than expected. At present, Huawei's newly listed middle and high-end mobile phones are basically 5G phones, and the market performance is good. A Huawei insider revealed to the Securities Times e company reporter.

It is reported that not long ago, when Huawei's high-end 5G mobile phone P40Pro+ officially went on sale, Huawei Mall had nearly 100000 people making an appointment to buy P40Pro+ 5G mobile phone as of the day before it went on sale. In addition, a number of offline stores in Beijing showed that this high-end flagship 5G mobile phone was in short supply and many stores were out of stock.

"affected by the epidemic, the trend of 5G replacement has been delayed, and 4G and 5G coexist for quite a long time in 2020. Zhao Ming, president of Glory, told the Securities Times e Company reporter. However, as for Glory itself, it bucked the trend in 2020 and its market share continued to rise. Until May this year, Glory's sales in the Chinese market also continued to rise. "the sales of 5G mobile phones, Glory X10 series should be tens of millions of units, and 5G phones such as 30s and 30 series will also exceed the company's expectations."

Zhao Ming believes that according to its own business judgment and pace, the company has been laying out 5G from last year to the present, launching the most valuable products in all gears, which better match the needs of different stages of the market.

It is also understood that at present, OPPO's 5G terminal products have also covered from 2000 yuan to 7000 yuan, which can meet the needs of different consumers. "in the future, new products worth more than 1500 yuan will be 5G mobile phones. Our 5G strategy is to enable all users to use 5G quickly, which is the idea of our 5G products. OPPO told the Securities Times e Company reporter.

Prior to this, on June 6, 2019, the Ministry of Industry and Information Technology issued 5G commercial licenses to China Telecom Corporation, China Mobile Limited, China Unicom and China Radio and Television. On October 31, 2019, the three major operators announced 5G commercial packages and officially launched 5G commercial packages on November 1st. it marks that China has officially entered the 5G commercial era. Subsequently, the major domestic mobile phone brands Huawei, OPPO, Glory, XIAOMI, vivo, realme and so on have joined the 5G mobile phone war. At present, the mainstream products of various brands are 5G terminals.

The wave of 5G replacement starts in the second half.

With regard to the replacement trend of 5G mobile phones, the aforementioned Huawei personage believes that market changes will take time and cannot occur at once. In the first half of this year, the main replacement models are middle and high-end models, and almost all the new middle and high-end models in the market are 5G mobile phones. It is expected that there will be a major breakthrough in 5G mobile phone market share in the second half of the year. In his view, with the continuous decline in domestic 5G mobile phones and package prices in the second half of the year, as well as the acceleration of domestic 5G network construction, the domestic 5G replacement trend will enter the second half, mainly replacing medium-and low-end models.

It is understood that the lowest price of 5G mobile phones in the market has dropped to about 1500 yuan, which is the new 5G phone Redmi 10X released by XIAOMI on May 26th with a starting price of 1599 yuan. in addition, 5G mobile phones priced less than 2000 yuan also have Huawei Changxiang Z starting at 1699 yuan, Glory X10 starting at 1899 yuan, and XIAOMI Redmi K30 starting at 1999 yuan. It is widely expected that with MediaTek and Qualcomm Inc launching more mid-and low-end 5G chips one after another, 5G mobile phones are expected to continue to sink in the second half of this year, and the real 5G thousand-yuan phones are also expected to be available in the second half of this year.

Zhongtai Securities Research Institute has predicted that when the price of 5G smartphones is more than 4000 yuan, the market share will only reach 15%; if it is reduced to 2000 yuan, the market share will increase to about 41%. Once the price of the 5G phone falls to about 1000 yuan, its market share can quickly expand to 79%, becoming the mainstream of the industry.

As for the package, the reporter learned that at present, after China Mobile Limited offers a 30% discount in some areas, the discount price of the 128yuan 5G package is only 89 yuan per month, and the China Unicom 5G package can also be started at about 90 yuan. The price of such a package compared with November 1, 2019, the 5G package launched by the three major operators has dropped sharply. By the end of April 2020, the number of 5G package subscribers of the three major operators exceeded 75 million.

In addition, in terms of 5G network construction, by the end of March 2020, 198000 5G base stations had been built in China, and the Ministry of Industry and Information Technology estimated that the number of 5G base stations nationwide would exceed 600000 by the end of the year, achieving continuous outdoor coverage in prefectural-level cities, key coverage in counties and townships, and indoor coverage in key scenes, while the number of 5G users will reach 200 million, which means that domestic 5G network construction will be accelerated in the second half of the year.

"the continuous improvement of the performance-to-price ratio of 5G products and the gradual downward trend of prices are inevitable. Xu Feng, senior vice president of ZTE Corporation and president of the terminal division, said in an interview with the Securities Times e company a few days ago that in 2020, with the rapid improvement of 5G industry chain, technology and program maturity, chips and RF devices have also matured rapidly and entered a gradual decline in prices. In China, telecom operators also further reduce the purchase cost of consumers through a variety of machine purchase subsidies. Both mobile phone manufacturers and operators hope to promote more consumers to buy 5G mobile phones through the gradual decline in prices.

5G is not a simple trend of changing machines.

It is worth mentioning that in the face of the industrial tuyere brought by 5G, some mobile phone companies have made it clear that 5G does not bring a simple trend of replacement.

"under the national new infrastructure strategy, the popularization of 5G is the trend of the times. And 5G is not only a simple replacement wave, including artificial intelligence, big data and other technologies, will stimulate changes in many industries. "OPPO told the Securities Times e company reporter.

According to OPPO, OPPO is no longer just a mobile phone company. In the future, OPPO will use 5G to explore more possibilities. Aiming at the technical characteristics of 5G with large bandwidth and low latency, OPPO will explore 5G 3D video, 5G AR/VR, 5G cloud real-time games, 5G edge computing and AI. It will also focus on personal, home, travel and office scenarios to create a cross-scene, multi-terminal ecology around users' lives. OPPO has launched products such as smart headphones, smart bracelets, smartwatches and 5G CPE, and smart TVs will be launched this year, and more smart devices will be launched in the future to provide users with a more complete personal technology experience.

In addition, together with operators, OPPO will continue to explore 5G technology and feature applications, provide consumers with more refined products and services, and enhance the value of 5G from the fields of software, hardware and services.

OPPO invested 10 billion yuan in R & D in 2019, a large part of which was invested in 5G. Within three years, OPPO will invest 50 billion in R & D and continue to pay attention to cutting-edge technologies such as 5G/6G, artificial intelligence, AR, big data and so on. "OPPO said.

In fact, OPPO may be just the tip of the iceberg in the domestic mobile phone industry. According to a reporter from Securities Times e Company, at present, Huawei, Glory, realme, XIAOMI, OPPO and other mobile phone brands are all developing the 5G ecosystem of the whole scene. In addition, Huawei is also committed to using 5G technology to promote changes in automotive, security and other industries, and vigorously lay out vehicle networking, intelligent security and other areas.