India's 5G phone shipments grow 74% YoY as overall market shrinks

Shipments of 5G phones rose 74% year-on-year (YoY) in 2022, driven by larger availability of 5G chipsets, and the rollout of 5G services in India. This saw the total share of 5G phones in India rise to 31% of all smartphones shipped through 2022 — up from 17% in 2021, according to a report by market tracker CyberMedia Research (CMR).

However, the growth in 5G phone shipments failed to keep the overall smartphone market from shrinking, as industry experts highlighted a lack of availability of enough sub-₹20,000 5G smartphones in the market.

CMR reported an 8% YoY decline in the overall smartphone market through last year.

On January 27, fellow market tracker Counterpoint reported a 9% YoY decline in overall smartphone shipments, falling to 152 million units from 169 million in 2021. Both CMR and Counterpoint noted a lukewarm festive season period driven by macroeconomic concerns as one of the key reasons behind the decline in shipments.

On January 29, Mint reported that the domestic smartphone industry expected smartphone shipments to be either flat, or see a single-digit decline, as demand for consumer electronics remains unlikely to suddenly recover. Prachir Singh, senior research analyst at Counterpoint, said that record-high inventory of over 10 weeks hurt new phone shipments to India, and a flat festive season period led to a decline of nearly 20% sequentially during the December quarter as well. This, in turn, led to a drop in smartphone shipments through 2022.

To be sure, new device shipments rose by 11% YoY to 169 million units in 2021.

A tepid market has also seen brands struggle to incentivise buyers into procuring new smartphones. Navkendar Singh, associate vice-president of devices research at market researcher International Data Corporation (IDC) India told Mint on January 29 that smartphone usage cycles have risen to over 24 months in 2022, up from six months in 2020.

IDC’s Singh added that while this was largely due to the unavailability of ample affordable 5G smartphone choices priced at around ₹15,000, the market crunch has also seen a rise in the average selling prices (ASP) of smartphones over the past one year. According to industry analysts, while the ASP was at around ₹17,000 at the end of 2021, the same stood at around ₹20,000 at the end of last year.

Going forward, analysts expect the ASP of smartphones to further increase, even as demand — and therefore, shipments — remain flat. However, the market share of 5G smartphones is expected to move beyond 50% and drive phone sales through this year, as telecom operators continue to introduce 5G connectivity to more areas across the country.