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Shipments of 5G smartphones will surge this year in the face of a downturn in overall smartphone sales, according to a Wednesday report from research firm Canalys. For 2020, 5G phone shipments are expected to grow by 1,582% from 2019. If that forecast holds true, this year’s shipments would hit 278 million, up from just 16.5 million last year.

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The growth in 5G phone shipments for 2020 will come amid a sour picture for smartphone sales in general, which Canalys predicts will drop by 10.7% for the year.

Like other industries, the mobile phone sector was hit hard by the coronavirus pandemic and lockdown as consumers put off nonessential purchases amid fears of an economic slowdown. But the growing boom in 5G phone shipments is playing a recovery role.

“Global smartphone shipments are rebounding rapidly in many markets ahead of the economic and retail consumption recovery,” Canalys senior analyst Ben Stanton said in a press release. “Smartphone vendors have relentlessly pushed new product launches, as well as online marketing and sales during the post-lockdown period, generating strong consumer interest for the latest gadgets.”

Other factors are starting to boost 5G phone sales and help the smartphone industry recover, including the gradual reopening of brick-and-mortar stores and an improvement in logistics and production. As such, shipments have stabilized over the second half of 2020, and Stanton sees 5G grabbing the spotlight for this year’s holiday season.

Greater China will be the largest customer of 5G phones, expected to capture 62% of the market this year. The quick commoditization of 5G smartphones in mainland China will push shipments for 2020, according to Canalys.

“The economies of scale provided by the China market will allow vendors to launch more affordable 5G smartphones in other countries, even if 5G infrastructure in those markets is not fully ready,” Canalys analyst Shengtao Jin said in the press release. “It is expected that by 2021, nearly 60% of 5G smartphone shipments in China will be cheaper than $400, while 5G penetration in China will reach 83% in the next 12 months.”

Image: Canalys

North America will the next largest customer with a 15% share of 5G smartphones this year, followed by EMEA (Europe, Middle East, and Africa) and Asia Pacific, each with 11%. Many consumers have already dived into the 5G market, purchasing budget-friendly devices that are out in Europe, such as the Motorola G 5G Plus and the Xiaomi Mi 10 Lite 5G, according to Stanton. But other buyers in the UK and elsewhere are waiting an iPhone with 5G.

One obstacle for mobile carriers in Europe is the uncertainty regarding Huawei, which has been hit with sanctions by the US and other countries over security concerns, Stanton added. Supply chain constraints are likely to limit Huawei’s potential for smartphone sales. Though the company was expected to take a lead in smartphone adoption, other manufacturers are moving to fill the void, including Xiaomi, Oppo, and TCL.

The average selling price (ASP) of a 5G phone in Europe is expected to decline, but not as quickly as in China. That’s because Apple and Samsung both enjoy strong market shares across Europe. Canalys expects ASPs in the region to drop to $765 in 2021 and $477 in 2024.

Looking ahead, overall smartphone shipments are expected to rebound in 2021, growing by 9.9% to hit 1.3 billion units. At the same time, 5G phone shipments are forecast to grow by 95%, reaching 544 million units next year.