According to the latest data of International Data Corp. (IDC) Worldwide Quarterly Mobile Phone Tracker, the once rosy future of smartphones turns bleak as it is forecast to decline 11.9% year over year in 2020 with shipments totaling 1.2 billion units.
The forecast follows the largest year-over-year decline in history in the first quarter of 2020 (1Q20). Smartphone shipments are now expected to decline by 18.2% in the first half of the year as the macroeconomic impact of the COVID-19 pandemic continues to affect consumer spending. Global smartphone shipments are not expected to return to growth until the first quarter of 2021 (1Q21).
“What started as a supply-side crisis has evolved into a global demand-side problem. Nationwide lockdowns and rising unemployment have reduced consumer confidence and reprioritized spending toward essential goods, directly impacting the uptake of smartphones in the short term,” said Sangeetika Srivastava, senior research analyst with IDC’s Worldwide Mobile Device Trackers. “On the brighter side, 5G is expected to be a catalyst throughout the forecast period, which will play a vital role in worldwide smartphone market recovery in 2021.”
From a geographic standpoint, the Chinese economy will continue to be impacted by COVID-19. However signs of improvement are showing as lockdowns and supply chain disruptions have begun to ease a bit. For the most part, factories have resumed operations and the market has opened with some travel and logistical restrictions, leading IDC to believe the China domestic market will only see a single-digit decline in 2020.
“China’s recovery has been impressive, to say the least, especially given the initial impact of COVID-19 on the country,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers. “There’s no question that challenges lie ahead for the smartphone industry and we believe the economic downturn is going to cause some fluctuation in the vendor and price-tier landscape.”
IDC said the surge in consumer spending around devices that are less mobile than smartphones (PCs, monitors, video game consoles, etc.) will undoubtedly take a share of the consumer wallet that would have been put toward smartphone upgrades and 5G.
“We believe this will result in even more aggressively priced 5G smartphones than expected prior to the pandemic,” Reith said. “This could result in some share wins for the vendors that position their portfolios to capitalize on this change.”