Canalys: smartphone shipments will grow in 2021, 5G models will beat 4G-only phones next year

2020 saw a substantial dip in smartphone growth as shipments fell 7% due to the market conditions caused by the COVID-19 pandemic. 2021 will see the market recover, predict the analysts at Canalys, who also forecast that it will get close to a tipping point in the adoption of 5G.

The smartphone market will bounce back now that countries have started to get the pandemic under control. However, that bounce will be limited by the component shortage that has driven up prices of electronics and has caused makers to delay or even outright cancel product launches.

Even with that bottleneck global smartphone shipments are expected to reach 1.4 billion units this year, up 12% compared to last year. Gartner is forecasting an 11.4% increase, IDC is more conservative and predicts 1.38 billion units shipped for a 7.7% increase.

Makers will try to make the most profit off the limited supply. This means they will prioritize more affluent markets such as China, the US and Western Europe at the expense of Latin America and Africa where profit margins are slimmer.

But even that is not alone and Canalys predicts that makers will prefer supplying carriers over the open market. With carriers, people often buy a new phone when their contract is up for renewal, whereas those buying off-contract can easily hold off on upgrading. This could be the perfect opportunity for “challenger brands”, which rely more on open market sales than carrier support, if those open market channels are underserved by the big brands.

The analysts predict that next year 5G smartphones will overtake 4G models in terms of shipments. It’s already close – 5G models made up 37% of global shipments in Q1, a number that is expected to rise to 43% for the full year 2021.

Much of this growth is driven by affordable models – by the end of the year sub-$300 devices will account for 32% of all 5G smartphones shipped, according to the forecast. However, accommodating the extra cost of the 5G chipsets have caused makers to cut back on other features in this segment. We’ve already seen this with 5G versions having lesser screens or cameras compared to their 4G counterparts.

Here are the forecasts for smartphone shipments by region:

Source