Qualcomm working with OEMs to cut 5G smartphone cost to sub-Rs 8,000

It's the only way to boost sales of mid and entry level phones - the main volume drivers

Global fabless chip maker Qualcomm Inc is working with original equipment manufacturers (OEMs) to bring down the price of a 5G smartphone to around $90 (Rs 7,000-8,000), with reasonable additional features to attract the volume-driven mass consumer market, say mobile device makers.  

Rajen Vagadia, president, Qualcomm India & SAARC, told Business Standard that the mid- and entry-level phones in India were the main volume drivers. “Consumers targeting these segments are awaiting availability of affordable 5G smartphones. Our road map will enable OEMs to design products in these segments, and we expect 5G handsets to breach the Rs 10,000 and below price points,” he said.   

The move comes at a time when overall sales volumes of smartphones in the country witnessed a sharp decline of 19 per cent year-on-year in the January-March quarter (Q1 2023), the third consecutive quarterly decline according to the Counterpoint data.  

Although the premium and higher end (over Rs 30,000) of the market grew — sales of phones above Rs 45,000 grew by 66 per cent and those in the Rs 30,000-45,000 range, by 60 per cent — the volume drivers of the business, or the market below this, saw a substantial fall of around 33 per cent.

In the mass volume-driven market, sales of sub-Rs 10,000 phones fell by 9 per cent, primarily because of an elongated replacement period, declining feature phone to smartphone migration, and a weaker presence of new models in the market.

Currently, entry-level 5G phones are priced between Rs 12,000 and Rs 15,000. A reduction in price is crucial, especially with Reliance Jio and Airtel putting in huge investments to rapidly launch 5G across the country. 

They are expected to touch pan India by the end of the year. However, at the last count, the total number of 5G users in India stood at over 50 million.   

Vagadia said the inventory carried forward from 2022, along with the cautious channel view of the market and deferred spending by consumers, had contributed to the slowdown in sales of mobile devices in the volume-driven segments.   

OEM sources aware of the development said Qualcomm globally would be introducing lower cost chip sets with the capability to support numerous features associated with a 5G phone at the entry level. These will support three cameras, HD quality, and provide reasonable storage to enjoy various use cases associated with faster 5G speeds.

According to estimates, at the beginning of 2022, smartphone shipments were projected to hit around 190 million, but this was later readjusted to around 150 million by the end of 2022.

Mobile operators speak of many challenges, such as the fact that there are still around 400 million-plus feature phone users on 2G where the average selling price of a phone is sub-Rs 1,500 and who have postponed their need to upgrade.  

With the average selling price of smartphones hitting Rs 14,000-15,000, mobile companies also do not expect any substantial rise beyond this, which could also adversely impact overall value sales.