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Affordable high-end is no longer economical because of 5G

Xiaomi Mi 9T Pro

2018 was the year of POCO F1, Xiaomi Mi 9, OnePlus 6T and many other phones that offered some of the most cutting-edge specifications on the market, at a price that was still quite far from the four figures that other manufacturers were already starting to ask for their best smartphones.

Y things did not change too much in 2019: although OnePlus decided to sneak into the league of the big ones With its 7 Pro, the gap it left was occupied by terminals such as the Redmi K30 Pro, the realme X2 Pro, the ASUS ZenFone 6 or the Xiaomi Mi 9 itself. All of them with a technical sheet headed by the most powerful mobile processor out of the Qualcomm factories until then.

But from one day to the next, the picture seems to have changed completely. POCO's flagship mobile is now a mid-range phone. Xiaomi's Mi 10 series is so expensive compared to the previous installment that Xiaomi has had to go out to justify the price increase, OnePlus has also confirmed that the OnePlus 8 series will be more expensive, and even really It has been unable to maintain the excellent value for money of its previous X2 Pro in the new X50 Pro 5G, the base price of which is 200 euros higher. All this leads us to ask ourselves a question: what's going on with the affordable high-end?

Guilty? A chip too expensive

Qualcomm Snapdragon 865

All the aforementioned mobiles have something in common: are based on Qualcomm platforms, mostly from the high-end Snapdragon 800 series.

And it is that despite being the most expensive Qualcomm chips due to the complexity of their manufacture and the cost of the technologies they integrate, until now the manufacturers did not seem to have any problem in use Snapdragon 800 series chips on relatively affordable phones. That, however, has changed with the arrival of the new Snapdragon 865, as the one that promises to be the new king of the processors destined for Android devices in 2020 has ended up closing the tap of the affordable high-end. And all, because of 5G.

Unlike other chips like the Snapdragon 765, also created by Qualcomm, the Snapdragon 865 does not include an integrated 5G modem, and therefore manufacturers need to make an extra outlay to acquire the modem and integrate it into their phones, so as to provide them with compatibility with 5G networks. So the solution seems easy: dispense with the 5G modem and continue creating terminals with Snapdragon 865 chip without having to increase – too much – the retail price. Unfortunately it's not that simple.

Realme X50 Pro, rear

With the aim of promoting the arrival of more and more “5G ready” mobiles, Qualcomm forces manufacturers to purchase the processor in conjunction with the X55 5G modem Unlike what happened last year with the Snapdragon 855 chip, it was up to the manufacturers to decide whether or not to include the X50 5G modem in their terminals in exchange for a higher purchase price. Hence, phones such as the Xiaomi Mi MIX 3 5G or Galaxy S10 5G – in their variant with Snapdragon chip – were substantially more expensive than their respective versions without 5G connectivity.

This, therefore, results in higher production costs for manufacturers, which ultimately end up affecting consumers through a higher selling price of devices.

And if you think the difference is not so big as to justify such price increases, just take a look at the data. Xiaomi itself stated that the cost of the chip and the modem of its Mi 10 double the price of the processor used in the last generation. In addition, the renowned analyst Ming-Chi Kuo estimates estimates that the price of the "package" consisting of the Snapdragon 865 and the X55 modem is around $ 120 or $ 130While last year the price of the Snapdragon 855 – without a 5G modem – seemed to be around $ 70.

Nor should we forget that we are talking about brands that, in general, maintain a lower profit margin to that of firms such as Samsung, Google or Apple, and therefore the cost of the processor represents a significant percentage of the final sale price of their devices. Therefore, any increase in the cost of any of its components may influence the final price more than in the case of brand terminals with a higher profit margin.