- The rollout of 5G won’t be enough to kickstart a new era of “peak smartphone” in North America and Western Europe. China’s experience shows that users appreciate 5G, but will not rush for it.
- Users are holding on to their smartphones for longer in the West as well. We estimate that the average replacement cycle in North America and Europe now stands at 24 and 40 months, respectively, which is +30% and +24% longer than in 2016. By 2025, these longer replacement cycles could result in a -11% decline in local shipments, wiping out USD16bn of sales yearly. Globally, we estimate the cost to the industry at USD36bn in lost sales per year by 2025.
- The maturing smartphone market will force companies to adapt, especially in China and Vietnam (75% of mobile phone exports). We expect four main trends: industry consolidation, innovation, business diversification and a growing emphasis on circular manufacturing.