Market research firms agree, the smartphone market is in the worst state in the past 10 years as a result of global economic downturn, geopolitical issues and ongoing inflation.
According to research from TrendForce, global production volume of smartphones in the first quarter of this year was only 250 million units, a decrease of 19.5% year-over-year. This is the greatest annual decrease but also a historic low in quarterly production since 2014, TrendForce said.
The second quarter is not expected to be much better. TrendForce forecasts Samsung will drop nearly 10% in production due to weakening demand for new models while Apple is projected to decrease 20% after falling 27.5% in production in the first quarter.
Other smartphone vendors such as Oppo have taken measures to adjust to unsatisfactory market conditions which will result in a rise in the second quarter after falling 17% in the first quarter. Xiami also dipped 27.4% in the first quarter but with inventory adjustments it is projected to grow about 20% in the second quarter.
Recovery expected
For the year, smartphone shipments are expected to decline 3.2%, according to new research from International Data Corp. (IDC).
This is a revision from the 1.1% decline IDC predicted earlier this year. The downward revision is due to weaker economic outlook and ongoing inflation, the market research firm said. However, the good news is that IDC expects a market recovery in 2024 of 6.0% year-over-year growth.
Despite the lower forecast for 2023, IDC still expects a market recovery in 2024 with 6.0% year-over-year growth.
"Our conversations with channels, supply chain partners and major OEMs all point to recovery being pushed further out and a weaker second half of the year," said Nabila Popal, research director with IDC's Mobility and Consumer Device Trackers. "Consumer demand is recovering much slower than expected in all regions, including China. If 2022 was a year of excess inventory, 2023 is a year of caution.”
Popal said companies may be soon tempted to risk an upturn by taking risks with brands and new phones to reap potential rewards.
