Global smartphone shipments are expected to drop by nearly 10% this year, the tech analyst firm IDC says, forecasting growth in 2021 largely due to shipments of 5G devices.
The company said total shipments for 2020 would come to 1.2 billion units, a fall of 9.5%, adding that the market would recover fully by 2022 and achieve a compound annual growth rate of 1.7% over the five-year forecast.
This was based on the assumption that smartphones would continue to be the computing platform of choice for most of the world.
“5G remains a priority for all smartphone OEMs despite the challenges with the COVID-19 pandemic and lack of consumer demand,” said Ryan Reith, program vice-president with IDC’s Worldwide Mobile Device Trackers.
“While many of the top vendors have reduced their 2020 production plans to align with the market decline, we’ve seen most of the cuts focused on their 4G portfolios. Most channels in developed markets have set the expectation that the portfolios they carry will be dominated by 5G units by the end of 2020 leaving less shelf space for 4G.
“However, we still believe that consumer demand for 5G is very low and when that is combined with the economic headwinds facing the market, the pressure to drive down hardware and service fees associated with 5G will become increasingly important.”
IDC said the supply-driven 5G push in a poor economic climate would push down the average selling price of 5G devices.
Forty-three percent of the 5G devices sold in China had been priced under US$400 and IDC said it expected prices to be at US$495 by 2023, a figure which it said would assuage the concerns voiced by consumers.
Prior to the COVID-19 outbreak, it was expected that smartphone sales would return to growth in 2020. “Although we expect year-over-year growth of 9% in 2021, that is only due to the large drop in 2020,” said Nabila Popal, research director with IDC’s Worldwide Mobile Device Trackers.
“The real recovery won’t happen until 2022 when smartphone volumes return to pre-COVID levels.
“Other elements beyond 5G will play a role in the market recovery, most notably the continued opportunity in developing markets.
“There continues to be a strong shift towards low- to mid-end 4G devices in developing regions, which make up over 80% of smartphone volumes in these regions.”
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