IDC: Smartphone market bounce-back delayed by COVID-19
FYI, this story is more than a year old
A new IDC report claims that the expected recovers of the global smartphone market in 2020 may be slowed down by 10.6% year over year in 1Q20 thanks to the effects of COVID-19.
According to IDC’s Worldwide Quarterly Mobile Phone Tracker, the worldwide smartphone market is expected to decline by 2.3% overall in 2020 with shipment volume just over 1.3 billion.
Global smartphone shipments are expected to return to growth in 2021 driven by accelerated 5G efforts.
IDC has considered optimistic, probable, and pessimistic forecast scenarios that are driven by the uncertainties around COVID-19.
Current forecasts are aligned with the probable scenario, which ascribes a multi-quarter recovery for manufacturing and logistics given a more gradual return of Chinese workers to factories amidst persisting transportation challenges.
China's government will provide corporate subsidies and stimuli which will help to mitigate the demand shock, though it will still extend several quarters.
Demand in surrounding regions will also be briefly suppressed.
Global smartphone shipments show a more U-shaped recovery from the second half of the year. However, actual phone shipments could show a different overall shape given the seasonal nature of shipments.
"COVID-19 became yet another reason to extend the current trend of smartphone market contraction, dampening growth in the first half of the year. While China, the largest smartphone market, will take the biggest hit, other major geographies will feel the hit from supply chain disruptions,” says IDC Worldwide Mobile Device Trackers senior research analyst Sangeetika Srivastava.
“Component shortages, factory shutdowns, quarantine mandates, logistics, and travel restrictions will create hindrances for smartphone vendors to produce handsets and roll out new devices. The overall scenario is expected to stabilize from the third quarter of the year as the COVID-19 situation hopefully improves and 5G plans pick up the pace globally,"
With February and March as the time when manufacturers unveil key flagship products and conduct final pre-production tests and debug their products slated to be unveiled in the first half of the year, changes made to product plans for the first half of the year will likely lead to adjustment of product plans for the medium term and even the long term.
"For the epicenter, China, we forecast the domestic market to drop by nearly 40% year over year for first quarter and even with a potential March recovery it will still be difficult to reach last year's levels," says IDC client devices Asia/Pacific group research manager Will Wong.
"Buyers will purchase from online channels, which will account for a significantly increased share of phones sold in the first half of 2020 and may represent a permanent shift in buying behaviors."
The epidemic outbreak will undermine the Chinese economy as a whole and the many SMEs will likely bear the brunt, leading to tightened wallets of consumers.
At the same time, the SMEs in the phone industry, especially retail channel partners, will see the biggest effect and phone vendors that can effectively help their retail channel and other partners recover and reconsolidate after the end of the epidemic will secure more opportunities in the long term.
IDC Tracker products provide accurate and timely market size, vendor share, and forecasts for hundreds of technology markets from more than 100 countries around the globe. Using proprietary tools and research processes, IDC's Trackers are updated on a semiannual, quarterly, and monthly basis. Tracker results are delivered to clients in user-friendly excel deliverables and on-line query tools.