The China 5G handset juggernaut is slowing down.

For most of 2021 it's been growing at a thundering pace: 91 million devices shipped in the first four months, nearly triple the number in 2020.

But it's slowed down significantly. In March, 27.5 million 5G phones sold; in May, that had slumped to 16.7 million.

Figure 1: Cooling off period: China's 5G handset sales are freezing up – unlike the first four months of the year.
(Source: zhang kaiyv on Unsplash)

Because 5G now occupies about three-quarters of the device market, total shipments have fallen off a cliff as well. Just 23 million 4G and 5G smartphones sold in China in May, a 32% drop year-on-year, following a 34% plunge in April.

It's all relative

Of course even after the slowdown, China's 5G is still the world's biggest handset market by far. The 98 million phones sold in Q1 accounted for around 28% of Q1 global sales.

5G is an increasingly large part of the China device market, thanks to the attractive prices. The 108 million 5G devices shipped this year represented 73% of all sales. By comparison, just 46 million sold in the first five months of 2020, or 37% of the total.

Government research outfit China Academy of Information and Communications Technology (CAICT) offers three reasons for the 5G falloff.

One is the post-pandemic recovery that soaked up a lot of the unmet demand but has now run its course.

Another is the semiconductor shortage that has constrained the industry worldwide.

As Canalys Research Manager Ben Stanton put it: "The industry is fighting for semiconductors, and every brand will feel the pinch."

Mixed messages

CAICT also blames the decline in Huawei sales, yet this doesn't seem to be the case. Canalys numbers show that while Huawei's Q1 sales halved year-on-year, this was more than compensated by additional sales from Vivo, Oppo, Xiaomi and Apple.

Vivo now tops the rankings with a 23% share, with Huawei in third place on 15% – a long way back from last year when it owned 41% of the market.

But a factor that CAICT doesn't cite might also be in play here: Consumers don't have a reason to buy a 5G device.

Sure, 170 million 5G phones have shipped in the last 18 months, no doubt attracted by the better prices on data and video. That aside, subscribers aren't getting much that they weren't already getting from 4G.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

Unless a consumer is looking for a phone upgrade, there isn't a compelling reason to change.

Former China Mobile boss Wang Jianzhou spoke for many recently when he called for – or at least expressed a hope for – smart new device functionality to drive 5G take-up and usage.

This is certainly not just a China problem. It's just become more obvious as it is the first to hit this plateau. But as other countries reach this mark, expect to hear a lot more about 5G's missing spark.

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— Robert Clark, contributing editor, special to Light Reading