Why 5G could boost Apple iPhone sales in 2020

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It’s been a tough few years for smartphones. Despite the high-profile reveals of the latest Apple (AAPL) iPhones and Google (GOOGL) Pixel devices, smartphone sales have been in decline over the last three years as consumers hold on to their phones longer.

But one analyst predicts 2020 could be the year smartphone sales reverse the recent trend and finally move higher.

In a note to clients, Angelo Zino of CFRA said he expects smartphone sales to climb 3% in 2020 with selling prices going up by 5%. The switchover to 5G-enabled phones will help drive that.

“We believe that 5G represents a new opportunity for many mobile manufacturers,” Zino wrote. “Not surprisingly, we expect the improvement in 2020 to be largely dependent on more phone manufacturers shifting to 5G, coupled with favorable comparisons.”

Apple CEO Tim Cook, center, looks at the the new iPhone 11 Pro Max, during an event to announce new products Tuesday, Sept. 10, 2019, in Cupertino, Calif. (AP Photo/Tony Avelar)
Apple CEO Tim Cook, center, looks at the the new iPhone 11 Pro Max, during an event to announce new products Tuesday, Sept. 10, 2019, in Cupertino, Calif. (AP Photo/Tony Avelar)

Apple, so far, has held off on unveiling its 5G option, but is expected to roll out 5G functionality in its new phones in 2020. That could warrant a premium price on the latest model, Zino says, further boosting Apple’s bottom line.

“We think the Street is really underestimating the potential increase in average selling prices in terms of the next generation iPhone,” Zino told Yahoo Finance’s “The First Trade.”

And the increase in 5G phone sales could also help Apple’s suppliers. Zino has his eye on companies like Qualcomm (QCOM), Broadcom (AVGO) and Skyworks (SWKS), which supply Apple and others with chips involved in the next generation phones.

“Investors out there just continue to look at semis as being all alike in many respects,” Zino said. “Our view is, as far as 5G is concerned, you really want to play that connectivity names going into a 5G cycle, because when you think about 5G, it really is all about connectivity.”

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