Smartphone sales set to plummet this year

Smartphones sales are set for a big decline in 2022 as the market struggles to overcome a number of challenges, new fesearch from IDC has claimed.

The analyst house predicts shipments of smartphones will decline 3.5% to 1.31 billion units in 2022, following three consecutive quarters of decline and emerging challenges in both supply and demand.

However, IDC expects this to be a short term setback, and predicts the smartphone market will rebound to achieve a five-year compound annual growth rate (CAGR) of 1.9% through 2026.

What is behind the drop?

IDC lays the blame on several factors such as weakening demand, inflation, continued geo-political tensions, and ongoing supply chain constraints.

However, the current China lockdowns where singled out as the biggest issue.

Nabila Popal, research director with IDC, said the lockdowns are changing “global demand and supply simultaneously by reducing demand in the largest market globally and tightening the bottleneck to an already challenged supply chain.”

IDC says Apple is likely to be the least impacted vendor due to greater control over its supply chain, and because most of its customers in the high-priced segment are less influenced by macroeconomic issues like inflation.

However, shifting market conditions are not set to be felt equally everywhere.

IDC expects the largest decline in 2022 to be felt in Central and Eastern Europe, with shipments in the region down 22%.

China’s smartphones sales are forecast to decline 11.5% or roughly 38 million units, which is about 80% of the global reduction in shipment volume this year.

Western Europe is expected to decline a mere 1% while most other regions will see growth this year.

The Asia Pacific region (excluding Japan and China) will see 3% growth according to IDC.

Bucking the trend, 5G devices are expected to be exempt from the reduction in demand.

5G device sales are expected to grow 25.5% year-over-year in 2022 and account for 53% of new shipments with nearly 700 million devices and an average selling price (ASP) of $608.

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