According to a report, global smartphone shipments are expected to take a hit, falling 3.5 percent to 1.31 billion units by 2022. The decline has been attributed to “increasing challenges in both supply and demand.” As a result, original equipment manufacturers, including Apple and Samsung, have scaled back orders for this year. However, the market research firm claims that Apple appears to be the least affected supplier. 5G devices are also expected to grow by 25.5 percent year-over-year (YoY) by 2022.
According to IDC Worldwide Quarterly Mobile Phone Tracker, smartphone shipments are expected to decline by 3.5 percent this year. IDC says it has significantly cut its forecast for 2022 from its earlier projection of 1.6 percent growth after shipments fell in three consecutive quarters due to mounting challenges in both supply and demand. However, this is expected to be a short-term setback as the market is expected to reach a five-year compound annual growth rate (CAGR) of 1.9 percent through 2026.
5G devices are also expected to grow 25.5 percent in 2022 (Image: IDC)
Nabila Popal, director of research at IDC’s Worldwide Mobility and Consumer Device Trackers, emphasized that the smartphone industry is being hit by “declining demand, inflation, ongoing geopolitical tensions, and ongoing supply chain constraints.” This, along with the Chinese lockdowns, is having a major impact on smartphone shipments. “The lockdowns are hitting simultaneously obal supply and demand simultaneog demand in the world’s largest market and tightening the bottleneck for an already challenged supply chain,” said Popal.
IDC expects these challenges to subside by the end of this year and the market to recover in 2023 with a 5 percent growth rate.
Regarding OEMs, supply and demand challenges have forced many of them, including Apple and Samsung, to cut orders for this year. The research director says that Apple appears to be the least affected supplier. This is because Apple has more control over its supply chain. Another reason for the smaller impact on the Cupertino-based company is that most of its high-end customers are less affected by macroeconomic issues such as inflation.
Another IDC research director says that while 4G SoC supply has been tight, the market continues to shift towards 5G SoCs. “The bigger problem has been the tight supply of components such as PMICs, display drivers, and discrete Wi-Fi chips. Capacity is increasing for these semiconductors made in higher process nodes, and newer versions of Wi-Fi chips are being made with newer process nodes. Combined, these changes in supply and demand will bring more balance to the market,” added Phil Solis, research director in IDC’s Enabling Technologies and Semiconductors team.
5G devices are expected to grow 25.5 percent by 2022, accounting for 53 percent of new shipments with nearly 700 million devices and an average retail price (ASP) of $608 (about Rs. 47,150). 5G is expected to reach a 78 percent volume share by 2026 with an ASP of $440 (approximately Rs. 34,100). On the other hand, the 4G phone ASP is expected to hit $170 (about Rs. 13,200) in 2022, dropping to $113 (about Rs. 8,760) by the end of the forecast period.
Regarding segregation by region, the biggest drop in 2022 is expected in Central and Eastern Europe, with a 22 percent decrease in shipments. China is expected to decline by 11.5 percent, about 80 percent of the global decline in shipping volume this year. In Western Europe, the fall is expected to be 1 percent. On the contrary, other regions, including Asia/Pacific (excluding Japan and China), will show positive growth (about 3 percent) this year.
