Smartphone shipments down but may make a comeback in 2022
FYI, this story is more than a year old
Global smartphone shipments are expected to drop in 2020, however a strong 5G push is expected to bring the market back to growth in 2021. This is according to IDC’s Worldwide Quarterly Mobile Phone Tracker.
The report found that the worldwide smartphone market is forecast to decline 9.5% year over year in 2020 with shipments totaling 1.2 billion units.
While the second quarter of 2020 (2Q20) resulted in slightly better than expected numbers, the market was still down 17% year over year with visible signs of economic concerns.
On a positive note, IDC expects the smartphone market will return to a full recovery by 2022, and will achieve a compound annual growth rate (CAGR) of 1.7% over the five year forecast, largely driven by the assumption that smartphones will continue to be the computing platform of choice for most of the world, the report finds.
IDC Worldwide Mobile Device Trackers program vice president Ryan Reith says, "5G remains a priority for all smartphone OEMs despite the challenges with the COVID-19 pandemic and lack of consumer demand.
"While many of the top vendors have reduced their 2020 production plans to align with the market decline, we’ve seen most of the cuts focused on their 4G portfolios.
"Most channels in developed markets have set the expectation that the portfolios they carry will be dominated by 5G units by the end of 2020 leaving less shelf space for 4G.
“However, we still believe that consumer demand for 5G is very low and when that is combined with the economic headwinds facing the market, the pressure to drive down hardware and service fees associated with 5G will become increasingly important."
This supply-driven 5G push mixed with a poor economic climate will only accelerate the drop in 5G average selling prices (ASPs) in 2020 and beyond, IDC states.
In the past quarter, China saw 43% of 5G devices priced under $400. IDC expects global 5G smartphone ASPs to hit $495 by 2023, which should eliminate most of the price concerns voiced by consumers in recent IDC surveys. As a result, IDC expects 5G smartphones to capture 50% of the global market by 2023.
According to IDC, it is important to note that prior to the pandemic there was an expectation that total smartphone sales would return to growth in 2020 which is now unlikely.
IDC Worldwide Mobile Device Trackers research director Nabila Popal says, "Although we expect year-over-year growth of 9% in 2021, that is only due to the large drop in 2020. The real recovery won't happen until 2022 when smartphone volumes return to pre-COVID levels.
"Other elements beyond 5G will play a role in the market recovery, most notably the continued opportunity in developing markets. There continues to be a strong shift towards low- to mid-end 4G devices in developing regions, which make up over 80% of smartphone volumes in these regions."