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Smartphone market to shrink globally to 1.36 billion units in 2022

Smartphone market to shrink globally to 1.36 billion units in 2022

While overall supply has improved in 2022, shortage of parts continues to plague the industry

Another factor that is adding to the fall is the US dollar strength amid rising US interest rates, due to which emerging economies will also face capital flight and inflation. Another factor that is adding to the fall is the US dollar strength amid rising US interest rates, due to which emerging economies will also face capital flight and inflation.

Owing to the shortage of components, smartphone shipments are likely to fall by 3 per cent in 2022. According to Counterpoint Research’s latest Global Smartphone Quarterly Shipment Forecast, the total smartphone units shipped globally in 2022 are expected to fall to 1.36 billion units, from 1.39 billion units in 2021.

The overall supply situation is expected to gradually improve in 2022 compared to the previous year, however, shortages of several parts have not been resolved yet.

Even the expectations for recovery are now falling sharply due to various reasons. Firstly, China’s zero-tolerance approach towards the latest COVID-19 resurgence, with lockdowns of cities and even entire regions, has been slowing down its economy, besides causing a chain reaction across the global economy due to the country’s closed factories and rising logistics costs.

Secondly, consumer sentiment has contracted significantly recently due to the spread of global economic uncertainty and surging inflation due to the prolonged Ukraine-Russia war. Another factor that is adding to the fall is the US dollar strength amid rising US interest rates, due to which emerging economies will also face capital flight and inflation.

Liz Lee, Senior Analyst at Counterpoint Research says “However, the outlook for a smartphone market recovery in the second half still stands. At the end of May, the Chinese government convened a meeting for large-scale economic stability countermeasures. The government is expected to implement more aggressive policies to stimulate the economy in the second half. Besides, we believe that new foldable smartphone launches, led by Samsung, will be able to stimulate demand in the premium segment.”

While the Q2 2022 results will be weaker than expected, the outlook for a rebound in H2 still stands mostly due to the 5G devices.

Graphic: Mohsin Shaikh

Peter Richardson, Vice President at Counterpoint Research, explains as efforts to spread low- and mid-priced 5G devices continue, the global market for 5G devices is expected to show healthy growth and act as a significant driver of the overall smartphone market. Even operators are actively promoting 5G, and the incentives are sufficient in many markets to cause consumers to switch to the new technology. However, the recent global inflation trends are hitting the consumer demand and smartphone BoM costs, acting as a risk for the 2022 smartphone market.

According to Counterpoint Smartphone Shipments, over 1.47 billion smartphones were shipped in 2019. With the pandemic hitting the world and pushing countries into lockdown, the shipment fell to 1.33 billion units in 2020. The year 2021 witnessed a rise with 1.39 billion units shipped.

Published on: Jun 03, 2022, 2:51 PM IST
Posted by: Mehak Agarwal, Jun 03, 2022, 2:48 PM IST