Smartphone sales crash globally as supply chains falter

COVID-19 has impacted all facets of human life and has impacted economies globally. The electronics and smartphone industry is also not immune to the situation. Multiple research reports suggest that global smartphone shipments have faced their worst quarter in the last many years.

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A report by market intelligence firm International Data Corporation has said that global smartphone shipments suffered the worst annual decline ever in the first quarter of 2020.

In its latest quarterly mobile tracker research report, the firm said that there was a significant decline in smartphone shipments as a result of the COVID-19 pandemic.

The IDC said that companies shipped around 275.8m smartphones in the first quarter of 2020, a slump of 11.7% year-on-year. The company said that this was the largest ever year-on-year decline in smartphone shipments as expected, with lockdowns more intense in China in the first quarter, the country saw the largest regional decline with shipments dropping 20.3% year over year. According to IDC, since China constitutes almost a quarter of worldwide shipments, this had a huge impact on the overall market. Moreover, the report also said that the global dependency on China for the smartphone supply chain also caused major issues as the quarter progressed. Other regions that contributed to the decline were the United States and Western Europe, which declined by 16.1% and 18.3% respectively.

“What started as primarily a supply-side problem initially limited to China has grown into a global economic crisis with the demand-side impact starting to show by the end of the quarter,” said Nabila Popal, research director with IDC’s Worldwide Mobile Device Trackers.

According to the firm, as consumers get increasingly cautious about their spending, smartphone purchases could suffer. The report suggested that this drop in demand, combined with the lockdowns and closures of retail shops across the globe, strongly impacted all consumer device markets, including mobile phones. “As the uncertainties of the lockdowns and total economic impact linger, vendors are reconsidering their outlook for 2020.”

In terms of shipments, Samsung shipped 58.3 million smartphones in the first quarter and regained its top position with a 21.1% share. This is primarily due to the continued success of the A series despite the launch of its premium 5G flagship, the Galaxy S20, the report said. Apple shipped 36.7 million iPhones in Q120 with a 13.3% share. Looking forward, the launch of the recent SE targeting the lower-priced segment could work well for the vendor.

This analysis is in line with other analysts and Counterpoint’s Market Monitor service has said that the global smartphone market declined by 13% YoY in Q1 2020. This is the first time since Q1 2014, that the smartphone market has fallen below 300 million units in a quarter. The research said that the pandemic has disrupted the signs of any recovery that the market started showing in Q4 2019.

Commenting on the impact of COVID 19 on smartphone demand, Tarun Pathak, Associate Director at Counterpoint Research noted, “From the consumer standpoint, unless replacing a broken phone, smartphones are mostly a discretionary purchase. Consumers are likely to withhold making many significant discretionary purchases. This means the replacement cycles are likely to become longer. Lockdowns in most parts of the world will be lifted in a staggered way, which will mean it could take time before the retail activity completely resumes.”