Apple will soon unveil its iPhone 15 series that will likely include several new features luring buyers to upgrade to a new smartphone. The new iPhone 15 will help iOS market share to reach record levels in 2023, according to new research from International Data Corp (IDC).
However, the bad news is that despite this surge in the iOS sector, the global smartphone market is heading toward its lowest volume in a decade this year.
IDC forecasts that worldwide smartphone shipments are forecast to decline 4.7% year-over-year in 2023 to 1.15 billion units. This is the lowest volume in a decade and presents a downward revision from IDC’s previous forecast of -3.2%. iOS shipments are expected to see 1.1% growth in 2023, reaching an all-time high of 19.9%.
Why is the smartphone market struggling so tremendously this year? IDC said it is due to ongoing inflation and weaker economic conditions that is dampening consumer demand and lengthening refresh cycles.
Recovery next year
Despite the lower forecast for 2023, IDC forecasts the market to recover in 2024 with 4.5% year-over-year growth. This will follow yearly growth in the low single digits for the following years resulting in a compound annual growth rate (CAGR) of 1.7%.
Source: IDC
"Although inventory levels have normalized, the majority of OEMs remain extremely cautious in their business planning for the short term, yet again kicking the recovery can down the road." said Nabila Popal, research director for mobility at IDC. "While the market will undoubtedly return to growth, longer refresh cycles are tapering the rate of growth over the long run, preventing the total available market from reaching pre-Covid levels.”
Popal said vendors should look to increase value and focus on incentives and promotions to attract consumers. Also, because consumers are holding onto devices longer, they may be willing to pay more for a phone they will have for a few years rather than replacing the phone every year. While this will help average selling prices to rise, vendors should anticipate longer refresh cycles to continue in the future, Popal added.
iPhone rising
iOS continues to remain resilient in the face of the ongoing inflation and weakened economic status, IDC said. This is the opposite of Android, which is forecast to decline 6.0% in 2023. This makes the release of the new iPhone series an opportune time for Apple.
"During a time when the entire market is struggling, it speaks volumes to once again see Apple going the opposite direction," said Ryan Reith, group vice president for mobility at IDC. "Attractive trade-in offers and on-going expansion of 'buy now, pay later' programs have helped the premium segment of the market more than anything, especially in more developed markets.”
Limited impact on CIS
The market for CMOS image sensors (CIS) is not expected to receive a bump from the iPhone 15 release, according to market research firm TrendForce.
The falling smartphone market is likely to have a greater impact on CIS with shipments falling to 4.3 billion units this year down from 4.5 billion units in 2022, or a 3.2% year-over-year contraction.
An interesting aspect of the CIS market is the growing size of image sensors reaching a 1-inch optical size after hovering for years in the 1/2/5-inch sector. TrendForce said it is likely CMOS image sensors will continue to become a pixel-size arms race as vendors fine-tune these semiconductors to be more sophisticated but remaining at 1-inch due to the need to keep weight down in smartphones.
