News briefing
         Xiaomi announced on November 20 that it would release three serial phone models of the Redmi Note 9 on November 26. Seeing that the 4G version was already released in March, the world audience expects this to be the first Redmi Note series model to support 5G.

impact analysis
 

    In the first half of 2020, with sales momentum actively triggered by mainland China, most of the smartphones that support 5G in the early stage of development are mainly mid-to-high-end models, even though the sales growth of 5G smartphones worldwide proved better than expected by all walks of life. Hence, even if the ASP of 5G smartphones that are sold in mainland China have dropped below US$500 in the second quarter, the price of 5G mobile phones remains relatively steep when viewed from the global perspective. Take the United States as an example; the ASP of 5G mobile phones in the second quarter bordered on US$800. Generally speaking, a tag-price between $300 to $500 is commonly known as the mid-end model and reckoned as the mainstream range for smartphone sales. Therefore, it is now critical for 5G smartphones to step into the major segment of the timeline and pricing strategy.

All in all, Redmi is considered to be the primary cost-effective brand of Xiaomi. As such, it can be broadly price-tagged into different series according to its positioning. Among them, the K30, which is the higher-end K series launched in May, does support 5G. It makes one wonder if the upcoming Note that is set to be released can press down the price of 5G smartphones even further.

     Irrespective of what the Redmi release brings to the table, penetrating mid-end models will be the only way for 5G to become mainstream, which would bring mixed results to the supply chain. As far as brand owners are concerned, although the procurement costs of 5G-related components are steep, they can moderately lower other specifications in exchange for 5G support at this early stage. Via give-and-take, they can keep the overall BOM Cost to stay within a certain price range so that the 5G supply chain can always enjoy a honeymoon period because the expansion of the 5G scale will surely benefit more manufacturers in the future. In the long run, when 5G begins penetrating price-sensitive mid-end models that would also suggest that the supply chain will confront greater price pressure. With developments to propagate sophistication, the scenario of cutting costs through economic scale will most certainly be put on again.