5G is the technology that telecom companies and smartphone brands are betting big on in India. However, in some Asian countries, 5G technology seems to be fading away. According to a report by research firm Canalys, demand for 5G-compatible devices has declined in Southeast Asia. “Demand for 5G equipment has come to a standstill,” said Canalys analyst Chiew Le Xuan. The report is based on smartphone shipments in Q2 2022. Overall, Southeast Asia smartphone shipments reached 24.5 million units, down 7% q-o-q. Indonesia, Malaysia, Vietnam, Thailand and the Philippines are the five largest smartphone markets in this region.
The five largest markets in the region have stalled this quarter as the industry is experiencing significant macroeconomic difficulties and resulting pressure on local consumer demand. Despite the festivities of Ramadan in Malaysia and Indonesia, both countries posted smaller-than-expected sequential growth of 6% and 2%, respectively. The Philippine market grew 4% quarter-on-quarter due to increased spending during elections. Thailand was affected by the severe devaluation of the exchange rate against the dollar and as a result saw a decrease of 14% compared to the previous quarter. Meanwhile, Vietnam dropped by 20% due to increasing consumer uncertainty.
Demand for 5G has dropped due to poor implementation
The report says that demand for 5G smartphones has dropped due to the excessive rollout of 5G networks in these countries. Buyers are now looking for features like battery life, processor speed, and camera quality while making their purchases. “5G devices experienced a consecutive decline of 18% in total smartphone shipments for the first time. The rollout of 5G in developing Southeast Asian markets has been difficult, guaranteed. hype for 5G has dropped and demand has shifted to more practical aspects of smartphones like battery life, storage capacity, processor speed and camera quality. has led to consumers looking for more durable devices with less practical quality like 5G.The practical use of 5G has not been seen and especially is unnecessary for mid-range devices when 4G is available. The report says the speed is sufficient for daily use.
The report adds that maintaining equipment affordability while increasing profitability is the biggest challenge for vendors. “Competition in the entry-level segment is getting fiercer with the introduction of many new products by Android smartphone vendors. It is very important for supplier to optimize product portfolios to improve their brand and reach. At the same time, suppliers should be aware of the consumption of products in the same price segment,” the report added.
The report forecasts that the remainder of 2022 will be challenging for smartphone vendors. Companies need to address rising costs, foreign exchange volatility and shrinking consumer demand. “Suppliers will have to keep a close eye on profit margins while competing vigorously for market share in price-sensitive Southeast Asia,” the report said.