Economic and geopolitical uncertainty ‘hurts’ the smartphone market

By Fotis Fotinos

Economic and geopolitical uncertainty is having a negative effect on the global smartphone market, as demand is expected to fall by 3.5% this year, according to IDC (International Data Corporation) and the Worldwide Quarterly Mobile Phone Tracker.

In particular, it is estimated that 1.31 billion smartphones will be available, a number reduced by 3.5% compared to a year earlier.

IDC revised forecasts after three consecutive quarters of declining sales, which “refuted” the initial estimates for growth of 1.6%.

Return to growth in 2023

However, the research company clarifies that the decrease in smartphone sales will be limited to 2022 and will not be extended over time.

In particular, IDC expects a recovery in sales from 2023, forecasting an annual growth rate (CAGR) of 1.9% by 2026.

It is claimed that market challenges will be mitigated by the end of 2022, with ongoing problems in semiconductor supplies being minimized from the second half of this year. Therefore, the market is estimated to recover in 2023, recording an increase of 5%.

“The smartphone industry is facing growing challenges from many fronts, weakening demand, inflation, continuing geopolitical tensions and continuing constraints on the supply chain.

“Lockdowns have hit global demand and supply at the same time, reducing demand in the world’s largest market, China, and pushing supply due to supply chain arrhythmias,” IDC said.

By geographical area, the biggest drop is expected in smartphone sales in Central and Eastern Europe (OEM), with a decrease of 22%.

China’s market is projected to shrink by 11.5% or about 38 million units, which corresponds to about 80% of the global decline in sales volume this year.

Accordingly, the Western European market is expected to decline by 1%, while most other parts of the world will show a positive trend, including Asia / Pacific (excluding Japan and China), with growth of 3%.