(Yicai Global) July 14 -- China's busy fifth-generation wireless handset market is expected to slow growth after shipments more than doubled in the first half.

Shipments rose to 128 million devices in the first six months of this year from a year ago, making up 73 percent of all, according to the latest related data an institute under the Ministry of Industry and Information Technology revealed.

Last month, the number was 19.8 million 5G phones, rising 13 percent from a year ago.

The new technology's penetration rate has been above 70 percent since March. By year-end, the rate will exceed 90 percent, Sinolink Securities predicted in a recent research note.

Cooling

Next year, the growth of 5G handset shipments should slow while first-tier and second-tier cities are likely to start price wars regarding premium models, wrote the Shanghai-based brokerage. But mid-range and budget phones should continue rapidly entering smaller cities, it added.

Consumer electronics firms already started reducing their orders of phone parts from upstream suppliers due to the expected slowdown, an insider in the smartphone manufacturing sector said to Yicai Global.

They have been placing fewer orders of printed circuit boards, passive components, and optical lenses since June to mitigate risks, the person added.

Speculation

The slowdown may put the brakes on the heating chip market, and bring losses to speculators.

Early this year, prices of main phone parts were hiked amid the global semiconductor shortage that started in the second half of 2020, said the insider. There was a strong trend to speculate on chips, which is obscuring real demand, the person added.

Soon, there were even signs of an oversupply of 5G chips, said the supply chain expert. For example, US Qualcomm's earlier tight output was brought back to normal, the person added.

Editors: Tang Shihua, Emmi Laine, Xiao Yi