Rising Flagship Smartphone Costs Are a Growing Threat to the SIM Card Market

Reading time ( words)

Rising device costs are expected to lower SIM card replacement rates contributing to an already challenged SIM card market. In 2018 5.53 billion SIM cards were shipped, marking the first global YoY reduction in SIM card shipments in over five years. Moreover, the continuation of challenging market conditions will likely translate into another market contraction in 2019, down by approximately -0.1% YoY.

2018 and 2019 have been marred by challenging market conditions in the APAC region. In China, the challenges were due to the relaxing of roaming fees, which had been a primary driver behind multiple SIM ownership per person. In Indonesia, challenges were driven by ID registration regulations and, in India, because of mobile network operator (MNO) market consolidation and the end of 4G promotions. However, the marked SIM card reductions in these three countries will be near offset by increased demand in the supply of eSIMs for hybrid smartphones, most notably within Apple’s range of XR and XS (and later this year the new 11 range) and Google’s Pixel range of smartphones. There will also be continued growth within the M2M/IoT sector thanks to increasing eSIM integration into automobiles.

The success of eSIM and activation rates are areas in which leading ecosystem players, including Gemalto, (a Thales company), IDEMIA, G+D, Valid, Samsung, and Infineon are monitoring closely, looking to understand eSIMs potential impacts on their respective removable SIM card business’s. “However, any eSIM impact in the shorter term will be minimal. The eSIM should be considered a longer-term market concern, with a reduction in SIM replacement rates driven more in the near term by increasing smartphone prices,” states Phil Sealy, Research Director at ABI Research.

Overall, ABI Research envisions that the market for removable SIMs will only marginally be impacted by the eSIM in a forecast period ending 2024, due to a continuation of dual SIM device issuance (encompassing a removable SIM slot and eSIM) and low-level eSIM readiness from an MNO perspective.

“The greater threat for the removable SIM card form factor in the shorter term (3 – 5 years) is being presented by the handsets market. Mobile devices are becoming increasingly more expensive, some of which are now above the US$1,000 mark. As a result, consumers are looking to spread the cost of a device over a longer period. MNOs have also taken note and are beginning to lengthen subscription contracts from the traditional 18 - 24 month period, to 36 - 48 months. The increase in device life and contract lengths will reduce replacement rates and thus SIM card demand,” concludes Sealy.

Over the course of the forecast period, these dynamics are expected to have an impact on removable SIM supply with ABI Research forecasting removable SIM card shipments reducing from 5.2 billion in 2019 to 5.0 billion in 2024. 

About ABI Research

ABI Research provides strategic guidance to visionaries, delivering actionable intelligence on the transformative technologies that are dramatically reshaping industries, economies, and workforces across the world. ABI Research’s global team of analysts publish groundbreaking studies often years ahead of other technology advisory firms, empowering our clients to stay ahead of their markets and their competitors.



Suggested Items

Worldwide Semiconductor Equipment Billings at $13.3 Billion in 2Q19; Down 20%

09/12/2019 | SEMI
Worldwide semiconductor manufacturing equipment billings reached $13.3 billion in the second quarter of 2019, down 20% from the same quarter of 2018 and 3% from than the previous quarter.

Uncertainties in the Market Rise while a Bounce in NAND Flash Prices Remains Unlikely in 3Q

06/20/2019 | TrendForce
According to the latest investigations by DRAMeXchange, a division of TrendForce, demand for smartphones and servers go below expected levels in 2019 as the US-China trade dispute heats up.

Telecom (Compute and Storage) Infrastructure Market to Reach $16.35B in 2022

09/03/2018 | IDC
A new forecast from IDC sizes the market for compute and storage infrastructure for Telecoms at nearly $10.81 billion in 2017. However, as Telecoms aggressively build out their infrastructure, IDC projects this market to see a healthy five-year compound annual growth rate (CAGR) of 6.2% with purchases totaling $16.35 billion in 2022.

Copyright © 2020 I-Connect007. All rights reserved.