Due to the economic impact from COVID-19, smartphone shipments are expected to drop 9.5% this year to 1.3 billion units, according to a new report from International Data Corporation (IDC). Nevertheless the researchers anticipate strong 5G smartphone adoption in years ahead, driven in part by a 5G smartphone price point of $495 by 2023.

In an earlier report in Telecompetitor, IDC said that what started as a supply-side crisis has evolved into a global demand-side problem, with lockdowns and pricing leading to an expected annual decline in smartphone shipments.

In its latest Worldwide Quarterly Phone Tracker report, the research firm said that the second quarter of 2020 was slightly better than originally anticipated, yet the market was still down 17% year over year, primarily due to economic concerns. Full recovery should occur by 2022, with a 1.7% compound annual growth rate over the five-year forecast.

The poor economic climate is also expected to put continuing downward pressure on device prices, according to IDC. The research firm’s 5G smartphone price forecast calls for an average selling price of $495 in 2023, enabling 5G smartphone adoption to capture 50% of the global market by that year.

“5G remains a priority for all smartphone OEMs [original equipment manufacturers] despite the challenges with the COVID-19 pandemic and lack of consumer demand,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers, in a prepared statement. “While many of the top vendors have reduced their 2020 production plans to align with the market decline, we’ve seen most of the cuts focused on their 4G portfolios. Most channels in developed markets have set the expectation that the portfolios they carry will be dominated by 5G units by the end of 2020, leaving less shelf space for 4G. However, we still believe that consumer demand for 5G is very low and when that is combined with the economic headwinds facing the market, the pressure to drive down hardware and service fees associated with 5G will become increasingly important.”

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