We no longer support this browser. Using a supported browser will provide a better experience.

Please update your browser.

Close browser message

The Future of 5G Adoption

J.P. Morgan Research examines the future of 5G in this report. Explore 5G market forecasts, future trends and possibilities, including enterprise use cases.

May 24, 2021

The adoption of 5G continues to surge, with a peak in 5G smartphone volumes expected in 2021E. In the future, 5G will likely provide substantial enterprise opportunity which corporates are just beginning to recognize. It is expected that 5G will exceed $180 billion in North America by 2030.

In this report, J.P. Morgan Research examines the future of 5G through the lens of consumer demand and global adoption, sharing market forecasts and exploring enterprise use cases.

Global 5G Adoption: Is This The Network of the Future?

Looking at the current landscape, 5G adoption reached one-third of global smartphone volumes in 4Q20, increasing from 18% of mix in 3Q20.

Table Units Millions, Y/Y % Change 53% 14% 26.3 5.2 North America 41% 30% 77.2 55.8 Asia Pacific 69% 59% 60.1 49.7 China 32% 11% 11.9 3.0 W. Europe 5% 1% 4.4 0.8 Rest of World Volumes Penetration 32% 18% 119.8 64.8 Total 4Q20 3Q20 4Q20 3Q20
Mobile Table Units Millions, Y/Y % Change 53% 14% 26.3 5.2 North America 41% 30% 77.2 55.8 Asia Pacific 69% 59% 60.1 49.7 China 32% 11% 11.9 3.0 W. Europe 5% 1% 4.4 0.8 Rest of World Volumes Penetration 32% 18% 119.8 64.8 Total 4Q20 3Q20 4Q20 3Q20

This growth was helped by new launches such as the 5G iPhone, which saw Apple achieve a 47% share of the 5G smartphone market. 5G adoption correlated with growing smartphone sale volumes – following 1Q and 2Q troughs, volumes reached 355 million in 3Q20 and 374 million in 4Q20.

When considering the future growth of 5G adoption, consumer demand will be key as it can be monetized. For example, Korea, where current consumer demand is strong, has built out 5G enabling speeds that are three to five times faster than 4G. Consumers there are now using two to three times more data, and they’re willing to pay more for it too with an average of a 20% premium on 5G. Looking ahead, a meaningfully higher take rate is now expected, with 5G anticipated to reach 1 billion subscribers faster than the 1.5 to two years it took for 4G.

5G Market Forecasts

J.P. Morgan North America Equity Research predicts that 5G volume growth will peak in 2021E. “We expect a more pronounced 5G cycle with peak smartphone growth in 2021E,” said Samik Chatterjee, Telecom & Network Equipment/IT Hardware Senior Analyst at J.P. Morgan. “In 2020, we saw around 225 million 5G smartphone units sold globally. 2021 should be the biggest year in terms of growth and we expect to see a steeper ramp in volume. Growth is likely to peak relatively early, and we estimate the total number of 5G smartphone units sold during the year to reach 525 million. This will be followed by moderating increases and we would give a volume estimate of 725 million units for 2022.”

5G Graph 800 mns 700 600 500 400 300 200 100 0 225 2020E 2021E 2022E 525 725 5G smartphone volume estimates Source: J.P. Morgan estimates.

5G Market Share: North East Asia Leading the Global Adoption of 5G Technology

At its Capital Markets Day, Ericsson noted that the North East Asia region has a very advanced 4G network and similar trends are expected with 5G.

South Korea is expanding networks following initial deployments and is expected to move to standalone 5G by the end of next year.

China remains aggressive in its 5G deployment. 600,000 base stations were deployed in 2020 and standalone 5G was launched by China Telecom, with other operators expected to follow soon.

Japan is expected to move to standalone 5G by the end of next year, with acceleration in activity expected following the iPhone launch.

Notably, 5G adoption is also expected to accelerate the Internet of Things (IoT) in the region. By 2025, Japan and South Korea are expected to see 150 million IoT connections, which is +29% in terms of compound annual growth rate (CAGR). China is expected to see 2.5 billion connections (+13% CAGR).

Development Graphic Activity acceleration is expected in Japan following the 5G iPhone launch 4 Product launches Expanding networks 600,000 base stations were deployed in China in 2020 with more to come 3 5G adoption will accelerate connections by up to 29% CAGR (Japan and South Korea) 2 Internet of Things Already launched by China Telecom, Japan and South Korea are expected to follow soon Standalone 5G 1 The Future of 5G Adoption: Trends in North East Asia Key upcoming developments include:
5G Adoption Mobile Product launches Activity acceleration is expected in Japan following the 5G iPhone launch 4 Expanding networks 600,000 base stations were deployed in China in 2020 with more to come 3 Internet of Things 5G adoption will accelerate connections by up to 29% CAGR (Japan and South Korea) 2 Already launched by China Telecom, Japan and South Korea are expected to follow soon 1 Standalone 5G The Future of 5G Adoption: Trends in North East Asia Key upcoming developments include:

The Future of 5G Lies in
Enterprise Opportunity

5G is fast becoming the network of choice due to its performance and reliability. In the future, enterprise use cases will become a primary driver for 5G growth. It is estimated that 5G will drive secular growth longer term, even beyond the 2022 timeframe, led by enterprise use cases – this differs from earlier technological transitions.

Ericsson also noted the opportunity for the enterprise market to expand at a 25% CAGR from 2022-2030 through digitalization and high performance mobile connectivity for applications, including connected vehicles, real-time automation and autonomous robotics. One notable development from 4Q20 was the acquisition of CradlePoint. This could be considered a stepping stone, preempting further organic and inorganic investment to address substantial enterprise opportunity over the next few years.

Samik Quote The biggest opportunity for 5G is in enterprise. Companies have only just started to scratch the surface in terms of investing in enterprise use cases. Factory floor automation will be one of the big use cases. Another is fixed wireless, which could boost connectivity through private 5G networks deployed across organizations, regions or campuses. Samik Chatterjee Telecom & Network Equipment/IT Hardware Senior Analyst J.P. Morgan

What’s the Scale of the Opportunity for 5G Enterprise Solutions?

Global enterprise opportunity enabled by 5G is expected to exceed $700 billion. North America is a primary driver for enterprise opportunity which could exceed $180 billion by 2030.

Some 5G applications have been noted in the following verticals:

Healthcare: 16% cost reductions for healthcare workers using remote monitoring tools for patients

Manufacturing: operating income improvements for operators led by AR technology, robotics and autonomy

Energy: connectivity applications for solar technology and wind farms.

Harnessing the power of 5G holds enormous potential and many more enterprise use cases are expected to emerge across various verticals. With North America leading the way, enterprise opportunity has the power to shape the future of 5G adoption.

Back to top button Back to top