The latest report from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker has revealed that global smartphone shipments decreased by 14.6% year-over-year to 268.6 million units in the first quarter of 2023 (1Q23). This marks the seventh consecutive quarter of decline. As the market continues to struggle with lukewarm demand, inflation, and macro uncertainties. The decline is more than the 12.7% IDC previously forecasted, but the results aren’t surprising. Inventory has remained elevated across regions. However, it is in significantly better shape compared to six months ago thanks to reduced shipments and heavy promotional activities.
Global Smartphone Shipments Continue to Decline in Q1 2023, but Recovery is Expected by Year End
“The industry is going through a period of inventory clearing and adjustment. Nabila Popal, research director with IDC’s Worldwide Tracker team, said that market players are cautious and using a conservative approach instead of dumping more stock into the channel to chase temporary gains in share. She thinks this is the smart thing to do if we want to avoid an unhealthy situation like 2022.
In China, the drop was close to 12%. It’s slightly more than expected despite the recent reopening of the market. Consumers are prioritizing travel and entertainment over smartphone purchases and uncertainty still lingers, which is dampening consumer sentiment. Developed markets like the USA and Western Europe fared better than others with declines of 11.5% and 9.4% respectively. Emerging markets like APeJC, CEE and MEA saw larger 17- 20% declines.
Recent discussions with OEMs and the supply chain suggest that the smartphone industry is gaining confidence in a return to growth late this year and into 2024. The largest supply side pullback in recent months was primarily those brands that serve the mid to low end of the market. This is usually where competition is high, and margins are low. Typically, these players are more hesitant to ramp back up again, and while this may still be the case, we are starting to see signs that optimism is growing amongst this crowd,” said Ryan Reith, Group VP with IDC’s Worldwide Tracker team.
Gizchina News of the week
The decline in smartphone sales is a sign of an economic downturn
While the decline wasn’t unexpected, it is important to note that almost all the regions suffered a double-digit decline in 1Q23. The market has been struggling with lukewarm demand, inflation, and macro uncertainties. Market players are cautious and deploying a conservative approach. Rather than dumping more stock into the channel to chase temporary gains in share. The industry is going through a period of inventory clearing and adjustment.
It is important to keep a close pulse on the market as recovery is expected by the end of the year. But there are still tough 3-6 months ahead. Everyone is anxious about exactly when the tide will turn. And wants to be first to ride the wave of recovery. However, it’s a tricky situation. Anyone who jumps in too soon will drown in excess inventory. Now more than ever, it’s important to keep a close pulse of the market. Barring unforeseen elements, IDC expects the market to cross into positive territory in the third quarter. And see healthy double-digit growth by the holiday quarter.
Overall, the smartphone market has been struggling for the past seven quarters. The decline is more than the 12.7% IDC previously forecasted, but the results aren’t surprising. The largest supply side pullback in recent months was primarily those brands that serve the mid to low end of the market. This is usually where competition is high, and margins are low. Typically, these players are more hesitant to ramp back up again. But there are signs that optimism is growing amongst this crowd. While the decline wasn’t unexpected, it is important to keep a close pulse on the market as recovery is expected by the end of the year.
Via: gizchina.com
