In 2020, the difference in 5G and 4G manufacturing costs will fall to US$15-35 per phone. Xiaomi in January is offering a decent 5G phone for $285. The 4G version is only $55 less.
Huawei and Samsung, who make their own parts and have enormous volume, will have an advantage. Xiaomi, Oppo, and Vivo believe their prices must be especially aggressive or they will lose market share.
As the price goes down, more people will choose 5G over 4G phones. In the fall of 2019, a third of Korean sales have been 5G phones, as the carriers are using subsidies to bring down the price. LG Uplus has been particularly aggressive, seizing what it considers a “once-in-a-decade” opportunity to gain share with 5G.
Although the first 5G phones cost about US$1,000, by October prices were down to $536 (Oppo) and $570 (Vivo). In January, Xiaomi will sell 5G for $285.Prices will continue to fall after that, although the $50-150 phones are still a while off.Continue reading