The Chinese economy, the war in Ukraine, low demand in the United States… no matter where you look, lately it’s all bad news for smartphone manufacturers, and the bar was already very low. The pandemic and supply problems in the semiconductor industry hit the sector hard in 2021 and 2022. Now, 2023 threatens to further complicate the landscape and could turn out to be the worst year in more than a decade for Samsung, Apple, Xiaomi and the rest of the manufacturers.
According to the consulting firm Counterpoint Research, 2023 will close with a 6% drop in the number of phones manufactured. 1,150 million devices will be put into circulation worldwide, a figure not seen since 2013 and far from the all-time highs of the decade, in 2016, when manufacturers sold more than 1,400 million devices.
The main problem is that the two territories that matter the most in the accounts of these companies (China, by volume and the US, by revenue) are buying fewer phones, and extending the renewal periods.
“Asia is one of the main obstacles to growth, the growth expected for China at the beginning of the year has not materialized, and the region in general is struggling, with lower demand in emerging markets,” Counterpoint explains in its report.
A quick review of the figures for China demonstrate the magnitude of the problem. Consumers came to buy more than 450 million phones a year before the pandemic. Now the figure is close to 270 million.
In the US, fear of recession is also holding back phone purchases. Despite the good employment numbers and inflation finally coming down, there doesn’t seem to be any interest in upgrading phones that were bought two or three years ago.
The most expensive and advanced phones are the ones that are holding up the best. Although Samsung and Apple are selling fewer phones, the average price is rising, and in Apple’s case, there is light at the end of the tunnel.
This year the company will launch the iPhone 15, which will likely be the first iPhone to come with a USB-C connection, which could encourage more users to trade in their old iPhones. “There are a lot of iPhone 12s in use and carriers are likely to run some aggressive promotions to encourage renewal,” said Jeff Fieldhach, North American market analyst at Counterpoint. In the US, the role of the operators in the sale of telephones continues to be important compared to direct sales to the consumer.
In other parts of the world, Counterpoint also sees a trend towards more expensive phones with better features, which will help Samsung, which has just introduced two new phones with flexible screens, and Apple to better withstand market turmoil.
