4G Smartphones Hit Hard by Semiconductor Shortage... Accelerating Transition to 5G

[Asia Economy Reporter Seulgina Jo] As the semiconductor shortage prolongs, the global 4G smartphone market has taken a direct hit. On the other hand, 5G smartphone shipments are showing an increasing trend, accelerating the transition to 5G. There are also predictions that by this time next year, 5G will account for 60% of global smartphone shipments.

According to market research firm IDC on the 6th, global smartphone shipments this year are estimated to reach around 1.35 billion units, a 5.3% increase compared to the previous year despite the semiconductor shortage. This is slightly below the level before the COVID-19 outbreak in 2019.

Specifically, 4G smartphone shipments are expected to decrease by 22.5% year-on-year, while 5G smartphone shipments are estimated to grow by 117%. IDC stated, "The semiconductor supply shortage and logistics crisis are affecting major manufacturers," adding, "In particular, the semiconductor shortage is concentrated more on 4G supply than 5G."

Earlier, IDC had forecasted that global smartphone shipments would increase by 7.4% this year and 3.4% next year. However, due to the sharp decline in global smartphone shipments in the third quarter caused by the semiconductor shortage and logistics crisis, IDC recently revised its annual outlook downward to 5.3% and 3%, respectively. IDC expects the semiconductor shortage situation will not improve until mid-next year.

Accordingly, there are also expectations that the transition to 5G will accelerate. Next year, 5G smartphones are expected to account for 60% of total shipments. By region, China is expected to be the largest 5G market, accounting for 46.9% of shipments, followed by the United States at 16.1%.

The average selling price (ASP) of 5G smartphones this year is projected to be $643, a 1.7% increase compared to the previous year. Amid predictions that prices of new smartphones such as the 'Galaxy S22' series to be released next year may rise consecutively due to the semiconductor shortage, IDC forecasts that the 5G ASP will fall to $416 by 2025.