The chipset accounts for over 25%-30% of the cost of an average smart phone.
Hence, a reduction in its price, device makers say, will make a huge difference to the cost of a phone.
Consumers keen to pick up a 5G phone can expect some good news.
Mobile device companies and global chipset manufacturers are closely working together to offer 5G mobile handsets at around Rs 10,000 by March next year, by which time the telcos are expected to have launched their 5G services in key markets of the country.
Device makers say this price will be an inflexion point, triggering a big shift of consumers from 3G and 4G phones to high-speed 5G services.
Mobile device firms working with chipmakers say Qualcomm, which has led the 5G device juggernaut, is planning to launch a new chipset in India which will be more cost-effective that its current 5G processor, Snapdragon 480.
Device makers also reveal that MediaTek, a Taiwanese semiconductor company, which had launched the Dimensity 700 chipset aimed at making affordable 5G devices, has got global volumes and is expected to cut prices.
Chinese player UNISOC, too, has 5G chipset offerings.
The chipset accounts for over 25-30 per cent of the cost of an average smart phone. Hence, a reduction in its price, device makers say, will make a huge difference to the cost of a phone.
Just a few months ago, the price of entry-level 5G phones was pegged at Rs 15,000. But with device makers and chipsets firms looking at ways to bring down costs, the price has now fallen to Rs 12,999.
Companies like Xioami have two offerings in this category -- Poco M3 Pro and Redmi Note 10T.
Says a senior executive of a leading chipmaker, "We are working with mobile operators and our assessment is that by March 2023, prices should hit Rs 10,000, or close to it.
"By the end of this year, with volumes of 5G phones picking up, prices should go down to around Rs 12,000."
Mobile device makers echo the same view.
A senior executive in Lava International says: "We are in talks with chipmakers and expect that by March, when the 5G network is running or ready in many parts, prices of devices will fall to Rs 10,000, which is clearly the inflexion point."
According to Counterpoint Research, 5G phones contributed 28 per cent of the total smart phone sales in India in the January to March quarter of 2022.
It projects that the figure will rise to 40 per cent by the end of this year.
The executive quoted above says that customers' minimum expectations from a phone have changed and one cannot make any compromises here to reduce costs.
For example, they want a 6-inch screen in 5G, they want it to be HD-enabled and with at least three camera lenses (compared to just one in a 4G launch phone).
So overall, the costs of the other components in the bill of materials have gone up, and they also need to come down.
The development of the 5G device ecosystem is very different from that of 4G, wherein networks were upgraded before there were enough brands and numbers of 4G devices available in the country.
This time around, device makers, along with chip makers, have created a vibrant ecosystem of 5G phones even before the networks have been put up.
In April 2020, Realme used Qualcomm's Snapdragon 865 processor to launch the country's first 5G mobile phone at a price tag of around Rs 42,000.
In January 2021, Qualcomm launched the Snapdragon 480 to support affordable phones and tied up with leading Indian mobile players.
As a result, prices continued to fall, hitting Rs 15,000 in 2021.
MediaTek entered India in April 2021 and partnered with Realme, One Plus, amongst others.
Feature Presentation: Ashish Narsale/Rediff.com