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Global smartphone shipments are expected to take a hit and decline 3.5 percent to 1.31 billion units in 2022, as per a report. The decline has been attributed to “increasing challenges in both supply and demand.” As a result, original equipment manufacturers, including Apple and Samsung, have cut back orders for this year. However, the market research firm claims that Apple seems to be the least impacted vendor. The 5G devices are also expected to grow 25.5 percent year-over-year (YoY) in 2022.

According to IDC Worldwide Quarterly Mobile Phone Tracker, the global smartphone shipments are expected to decline 3.5 percent this year. IDC says that it has significantly reduced its forecast for 2022 from the previous projection of 1.6 percent growth after the shipments declined in three consecutive quarters due to increase in challenges in both supply as well as demand. However, this is expected to be a short term setback because the market is forecast to achieve a five-year compound annual growth rate (CAGR) of 1.9 percent through 2026.

The 5G devices are also expected to grow 25.5 percent YoY in 2022
Photo Credit: IDC

Nabila Popal, research director with IDC’s Worldwide Mobility and Consumer Device Trackers, emphasised that the smartphone industry is hit by “weakening demand, inflation, continued geo-political tensions, and ongoing supply chain constraints.” This along with the China lockdowns has a great impact on smartphone shipments. “The lockdowns hit global demand and supply simultaneously by reducing demand in the largest market globally and tightening the bottleneck to an already challenged supply chain,” said Popal.

IDC says it expects these challenges to ease by the end of this year and the market to recover in 2023 with 5 percent growth.

When it comes to OEMs, the supply and demand challenges have forced many of them, including Apple and Samsung, to cut back orders for this year. The research director says that Apple appears to be the least impacted vendor. This is because Apple has greater control over its supply chain. Another reason noted for less impact on the Cupertino-based company is that a majority of its customers in the high-priced segment are less influenced by macroeconomic issues like 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 being increased for these semiconductors that are made in higher process nodes and newer versions of Wi-Fi chips are being made with newer process nodes. At the same time, demand is dropping. Combined, these supply and demand changes will put the market more in equilibrium,” added Phil Solis, research director in IDC’s Enabling Technologies and Semiconductors team.

5G devices are tipped to grow 25.5 percent YoY in 2022 and account for 53 percent of new shipments with nearly 700 million devices and an average selling price (ASP) of $608 (roughly Rs. 47,150). 5G is expected to reach a volume share of 78 percent in 2026 with an ASP of $440 (roughly Rs. 34,100). The 4G phones ASP, on the other hand, is expected to be $170 (roughly Rs. 13,200) in 2022, dropping to $113 (roughly Rs. 8,760) by the end of the forecast period.

As far as region-wise segregation is concerned, the largest decline in 2022 is expected in Central and Eastern Europe with shipments down 22 percent. China is forecast to decline 11.5 percent, which is about 80 percent of the global reduction in shipment volume this year. The decline in the Western Europe is expected to be at 1 percent. On the contrary, other regions, including Asia/Pacific (excluding Japan and China) will see positive growth this year (about 3 percent).


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