Smartphone sales are on the verge of falling. A new report shows that the market for mobile phones is in a recession phase. The main reasons for this drop in sales are inflation at a record high, the scarcity of chips and various lockdowns in China.
International Data Corporation (IDC), an internationally acclaimed analytics firm, just released their new smartphone market report. The collected data shows that will see a 3.5% decrease in turnover over the next year, according to the experts. According to IDC, only 1.31 billion smartphones will be sold in the world. Strategy Analytics estimates that global smartphone sales will fall by 2%. All brands will be affected.
The analysis firm points out inflation as a reason for its forecasts. It reached new records. Over a year, the eurozone saw 8.1% inflation. The United States has seen inflation rise at a record rate in the past 40 years. It rose 6.6% in a single year. The loss of purchasing power is expected to cause a decline in the demand for smartphones.
Smartphone sales are reduced by China lockdowns
Nabila Popal (research director at IDC), said that the smartphone industry is facing mounting headwinds. She was referring to dwindling consumer demand, inflation, ongoing geopolitical tensions and ongoing supply chain constraints. Despite negotiations with Russia. These are mainly: production issues that will harm the mobile phone market.
Many factories in Shanghai were paralyzed by the lockdowns, announced by China. Pegatron and Foxconn were among the many Apple suppliers that had to shut down their factories for several days. iPhone production experienced significant disruptions. IDC continues, “The lockdowns simultaneously affected global supply-demand by reducing demand on the world’s biggest market (Editor’s Note: China), and tightening the supply chain bottleneck,” he said.
The shortage of computer chips is also caused by lockdowns announced in China. The semiconductor production lines remain clogged up since the Covid-19 crisis. Manufacturers are still not able to meet brand demand despite the opening of new factories. IDC believes that the “continuing problems with semiconductor supply” will improve in the second half 2022. Smartphone Manufacturers Revise Their Sales Targets for 2022. Apple is expected to sell 20 million less iPhones than originally thought, according to a leak.
The iPhone 14 arrived within a few weeks. However, the Cupertino Group has warned its suppliers to be cautious about their sales forecasts. IDC however assures that Apple is the smartphone supplier most affected by China’s measures against Covid-19. The company enjoys “greater control over its supply chains”. According to the report, Apple customers are less affected by inflation-related purchasing power loss. Samsung made the same decision. The market leader in South Korea, Samsung, has decided to reduce its annual estimates by 10% and target 270 million units, rather than 300 million.
Strong comeback starting in 2023
IDC’s report for next year is more positive. The analyst firm predicts that the recession in the telephony industry will be temporary. To take advantage of the ending of the shortage of computer chips, the market should rebound from 2023. Global sales are expected to rise by 5% next year due in part to strong demand for 5G smartphone. IDC predicts that 5G device sales will grow by 25.5% annually over the next year, accounting for 53% new shipments at almost 700 million units.
Brands like Samsung and Apple dominate this market. The iPhone 12, the first compatible iPhone, was the main driver of 5G’s rise. The popularity of the range and the iPhone 13 contributed to the growth of the 4G successor.