IDC: Global smartphone market will remain challenged through 1st half of 2023
An updated forecast for the worldwide smartphone market from International Data Corporation (IDC) is showing a more prolonged recovery than previously expected. According to the latest Worldwide Quarterly Mobile Phone Tracker forecast, shipments of smartphones will decline 9.1% in 2022, a reduction of 2.6 percentage points from the previous forecast. As a result, IDC expects smartphone shipment volumes to total 1.24 billion units in 2022. While a recovery of 2.8% is still anticipated in 2023, IDC did reduce its 2023 smartphone forecast by roughly 70 million units, given the ongoing macroeconomic environment and its overall impact on demand.
“We believe the global smartphone market will remain challenged through the first half of 2023, with hopes that recovery will improve around the middle of next year and growth across most regions in the second half,” said Ryan Reith, group vice president with IDC’s Worldwide Mobility and Consumer Device Trackers. “Rising costs are an obvious concern for the smartphone market and adjacent consumer technology categories, but we believe most of this reduced demand will be pushed forward and will support global growth in late 2023 and beyond. A device refresh cycle continues to build in many challenged emerging markets while developed markets have offset rising costs with increased promotional activity, more attractive trade-in offers, and extended financing plans. This has supported growth in the high-end of the market despite the economic headwinds.”
5G continues to build out globally and will account for just over half of smartphones shipped worldwide in 2022, rising to 80% by 2026. In addition, market momentum continues to build around foldable phones. While this category is only about 1-2% of the global market in 2022, it still accounts for roughly 15-16 million smartphones. This number will only grow as costs decrease and more OEMs get behind the form factor transition.
“Despite the market slowdown, average selling prices (ASPs) continue to grow as consumers opt for premium devices that can last three to four years as refresh rates elongate in both developed and emerging markets,” said Anthony Scarsella, research director with IDC’s Worldwide Mobility and Consumer Device Trackers. “Smartphone ASPs are expected to grow for the third consecutive year as average selling prices will reach $413, up 6.4% from $388 in 2021. The last time the market witnessed ASPs surpass $400 was in 2011 ($425), when the market displayed over 60% shipment growth. Moreover, iOS unit share will reach 18.7% (the highest of any forecast year), which is a driving force behind the high ASP growth we currently see in 2022.”
|Worldwide Smartphone Forecast by OS, 2023 and 2026 Shipments, Year-Over-Year Growth, and 5-Year CAGR (shipments in millions)|
|OS||2023 Shipments||2023/2022 Growth||2026 Shipments||2026/2025 Growth||5-Year CAGR|
|Source: IDC Quarterly Mobile Phone Tracker, December 2nd, 2022|
IDC previously lowered its 2022 smartphone outlook in June, from an initial expectation of 1.6% growth in the space.
Broadly, the global sale of smartphones this year has been affected by a variety of macroeconomic trends including rising costs. For wireless network operators, that means fewer sales of smartphones and fewer opportunities to gain new customers who might switch providers amid the purchase of a new phone.
The trend could also affect 5G specifically. That’s because consumers globally may be holding onto 4G phones longer in order to avoid the purchase of a costly 5G phone.
IDC’s latest forecast follows similar warnings from other players in the space. For example, Qualcomm last month provided a revenue forecast fully $2 billion below market estimates. Qualcomm supplies core silicon to the likes of Apple, Samsung and others.
At the time, Qualcomm also reduced its projections for global 5G handset sales in 2022 to around 650 million, down from earlier forecasts of up to 750 million units
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For more information about IDC’s Worldwide Quarterly Mobile Phone Tracker, please contact Kathy Nagamine at 650-350-6423 or [email protected].
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology, IT benchmarking and sourcing, and industry opportunities and trends in over 110 countries. IDC’s analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the world’s leading tech media, data, and marketing services company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights.
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2 thoughts on “IDC: Global smartphone market will remain challenged through 1st half of 2023”
Smartphone shipments fell to a 10-year low in 2022:
According to Canalys, last year, global shipments were 11% lower compared to 2021, dipping below 1.2 billion. In Q4, shipments were down 17% year-on-year.
“Smartphone vendors have struggled in a difficult macroeconomic environment throughout 2022,” said Runar Bjørhovde, Canalys research analyst, who highlighted that it marks the worst Q4 and annual performance in a decade. Retailers in Q4 were “highly cautious” about taking on new inventory, a contributing factor to the low shipment volume, he added.
The preliminary figures, published on Tuesday, claim Apple took top spot from Samsung at the end of 2022; the iPhone maker achieved a market share of 25 percent in Q4, compared to its rival’s 20%. In Q3, it was Samsung enjoying the lead with a market share of 22 percent to Apple’s 18%.
Unfortunately for OEMs, the outlook this year for the smartphone market isn’t much better, with Canalys predicting flat to marginal growth.
“Though inflationary pressures will gradually ease, the effects of interest rate hikes, economic slowdowns and an increasingly struggling labour market will limit the market’s potential,” warned Canalys research analyst Le Xuan Chiew.
“This will adversely affect saturated, mid-to-high-end-dominated markets, such as Western Europe and North America,” he continued. “While China’s re-opening will improve domestic consumer and business confidence, government stimuli are only likely to show effects in six to nine months and demand in China will remain challenging in the short term. Still, some regions are likely to grow in the second half of 2023, with Southeast Asia in particular expected to see some economic recovery and a resurgence of tourism in China helping to drive business activities.”
The global smartphone market is showing signs of stabilising, but it continued to shrink in the first quarter of this year, according to new analyst data.
And even newer analyst figures suggest that India was likely a contributor to the decline.
The number of smartphones shipped worldwide fell by 12% year-on-year in Q1 2023 with unit shipments coming in at well under 300 million, representing the fifth consecutive quarter of decline, Canalys reported on Tuesday.
Limited improvements in a massively unfavourable macroeconomic climate mean the market has yet to recover, the analyst firm noted, hitting vendors’ investments and operations in several markets.
It did not name those markets. Interestingly though, it followed up its global smartphones data with an announcement from India, a market that has had a pretty bumpy start to the year.
Its figures show the first ever Q1 year-over-year decline in smartphone shipments in India to 30.6 million, a drop of 20%. The economic situation means demand there is slow too. However, Canalys insists that investments from major brands “are pouring in,” with companies focusing optimising retail, manufacturing, local sourcing, and R&D to secure their long-term position in what looks to be a promising market.
Indeed, while the mass market in India is moving slowly and is expected to continue to do so throughout 2023, Canalys analyst Sanyam Chaurasia predicts that “the premium segment is poised for growth,” boosting the average selling price of the overall market. “As disposable income gradually rises, consumers are willing to spend more on premium devices,” he said.
So while the decline in India in Q1 doubtless had an impact on worldwide smartphone shipment figures, the market is arguably in a stronger position than many, with customer demand looking more positive.
On a global level, “despite price cuts and heavy promotions from vendors, consumer demand remained sluggish, particularly in the low-end segment due to high inflation affecting consumer confidence and spending,” said Chaurasia. In turn, that means low levels of sell-in from the vendors, and cautious production.
However, there are some green shoots emerging.
“We have noticed some signs of moderation in the continued decline,” noted Canalys analyst Toby Zhu, highlighting improvements in demand for some smartphones and price brackets, and some vendors becoming more active in production planning and component ordering.
The analyst firm believes that smartphone industry inventories can reach a relatively healthy level by the end of Q2.
“It is still too early to predict the recovery of overall consumer demand,” Zhu said. “However, the sell-in volume of the global smartphone market is expected to improve due to the reduction in inventories in the next few quarters.”
The analyst names the growing popularity of 5G and foldable phones as “the new driving forces in the industry.”
On the vendor side, Samsung was on the only big name to achieve a quarter-on-quarter recovery, Canalys pointed out, putting it back in the number one spot ahead of Apple, with a market share of 22 percent to the iPhone maker’s 21 percent. The latter experienced “solid demand” for its iPhone 14 Pro series in Q1, the analyst firm said. Similarly, new product launches towards the end of the quarter helped Xiaomi retain the number three position with an 11 percent share, followed by Oppo and Vivo. In India, Oppo squeezed past Vivo to take the number spot for the first time, incidentally, while Samsung continued to lead the market.