What are the causes behind the decrease in Global Smartphone Shipments?

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What are the causes behind the decrease in Global Smartphone Shipments?

The world is witnessing an international recession and an increase in inflation. There are many causes. The disruptions to supply chain operations and closures due to Covid 19 is one of the primary motives. Other factors include increased demand from the US and the strengthening dollar, higher costs for fuel, etc. In this context the mobile sector is also experiencing some shocks. According to a new report by IDC (International Data Corporation) the global market for smartphone declined 8.7 percent over the previous for the year through the first quarter of 2022 (2Q22). The fourth quarter in which the market for smartphones is declining, with the number of units sold dropped by 286.0 million , or 3.5 percent less than the forecast.

As we had anticipated, Central and Eastern Europe (CEE) suffered the biggest losses in the second quarterof 2018, which was a reduction of 36.5 percent, due to the ongoing war within Ukraine continues to have a negative impact on the region.

In regards to volume CEE just accounts for 6percent of global shipments so China’s 14.3 percent decline year-over-year was responsible for the most significant decline in global volume. Asia/Pacific (excluding Japan and China) (APeJC) is the region that is responsible for more than 50% of global shipments and also slowed by 2.2 percent over the course of the quarter to the 22nd. All regions other than Canada saw losses in the single digits in the low to mid-single.

“What started out as a supply-constrained company has now become a market that is strained by demand,” said Nabila Popal who is the director of research for IDC’s Worldwide Tracker team at IDC. “While the supply increased because capacity and production intensified, rising inflation and uncertainty in the economy have dampened consumption and pushed up inventory levels across the globe. OEMs have cut back on orders throughout the year and Chinese suppliers decreasing orders most significantly as their biggest market continues to struggle. While we expect that demand will start to grow in certain regions at the final quarter of 2018 The smartphone market forecast for 2022 is expected to be adjusted downwards. We believe that any decline in demand is merely delayed into the future.”

Despite the challenging conditions, Samsung dominated the market with the largest market share of 21.8 percent, and an impressive growth in all regions , except Europe. Apple was second, with a slight increase by market share. However, the other major brands like Xiaomi and vivo Oppo etc. have seen a decrease in sales as shown in the table above. The overall decrease in global shipping was 8.7 percent.

Reasons for a decline in smartphone sales around the world:

Fuel cost:

The astronomical rise in costs of fuel is one of the main reasons behind the drop in global smartphone sales. The price of oil in the international market is increasing for months, which means that shipping costs have been increasing multiple times. Furthermore, the prices of fuel have had an impact on the services industry. The liability has increased by two times and the earnings have decreased. This is why, due to a decrease in production, there’s a shortage of smartphones. Due to these reasons, we’re seeing an increase in global smartphones’ sales.

Global Recession and spiraling Inflation:

Over the past six months the global recession and rising inflation have affected nearly everyone on earth. Stocks of all businesses across the globe have plummeted. Additionally, the costs of commodities have also risen significantly, which has had a major impact on those who earn a salary. So the ability of people to purchase has decreased. 

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Additionally, as a result of the current economic crisis, governments across the globe (as the case in Pakistan) have added tax burdens on individuals and businesses which have added to the suffering. Another reason that smartphone sales worldwide have been in decline.

Dwindling Demand:

As we’ve mentioned earlier that the world market has become constrained by demand. There has been a drastic decrease of demand in Asia Pacific and central-eastern Europe. But, the decrease in demand on central-eastern Europe and in the Chinese marketplace is by far the main factor in the decline in sales of smartphones. Unfortunately, we cannot think that the demand will grow in the near term until the global recession continues.

The price of phones has increased:

As the costs of production increase, as do the prices of smartphones and other devices. The combination of the higher cost of smartphones and a lack of purchasing power has reduced the smartphone sales to a degree. For instance it is anticipated that the new iPhone 14 will expectedly launch at $799 (base version). In case the same scenario persists, we’re not sure it’s likely that this new iPhone can be expected to compete with its predecessor’s sales.

The supply gaps are result from the Ukraine conflict:

The supply gap that has been created by the Russian-Ukraine conflict is another factor in the drop in smartphone sales worldwide. Russia is under massive sanction from west, and there is no way for smartphone deliveries to be shipped into Russia. Eurasian country. Additionally, numerous trade routes have been affected by sanctions, which means that supply has been cut off and sometimes, deliveries have to be made for bigger routes that incur additional expenses.

All of the reasons mentioned could be related to the decrease in worldwide smartphone sales.

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