China Vendors Set Pricing For Initial 5G Phones

China’s vendors are likely to adopt a pricing strategy selling their 5G smartphones at about CNY500 (USD 74) more than their current price ranges to increase profitability in 2019, according to sources from Taiwan’s handset supply chain.

China brands’ “5G+500” formula looks to add a markup on the prevailing prices of CNY2000-2500 set for their respective premium smartphone models for marketing their initial offerings of 5G phones, said the sources.

Based on calculation by China’s handset-design houses, the production cost for 5G phones as compared to their 4G predecessors should increase by less than USD 80 per unit, including an increase by almost USD 50 for 5G modem chips and application processors, and the remaining USD 30 for new antennas, PCBs and other materials, the sources indicated.

The pricing for the initial 5G phones will represent a premium of about 20 percent over their production costs, which should be acceptable to end-market consumers, while still allowing vendors to ramp up sales growth and making profits, albeit not too significant, said the sources.

The commercialization of 5G phones in 2019 will also benefit mobile AP vendors and related material suppliers added the sources.

Mobile AP suppliers including Qualcomm, MediaTek, Intel, HiSilicon Technologies, Samsung Electronics and Unigroup Spreadtrum & RDA have all claimed that their mobile SoC solutions launched in the first half of 2019 will support 5G modem chips enabling the roll-outs of 5G-enabled smartphones.

In fact, the top-three AP vendors Qualcomm, MediaTek and Intel already unveiled their 5G modem chips in the second half of 2018 with commercial deliveries planned for 2019, noted the sources.―Digitimes