Global smartphone shipments plunged to a new low of 275 million units in the first quarter because of the coronavirus pandemic, Bloomberg reports. The publication notes market research groups IDC and Strategy Analytics found the worldwide handset market contracted by double digits in Q1.
In addition, DigiTimes estimates the intercontinental mobile device sector will fall by 15 percent for the full year.
Explaining the Global Smartphone Market Contraction
First identified in China in late 2019, the novel coronavirus expanded with frightening speed and quickly reached pandemic proportions. To halt the spread of the ailment, the Sino government put large swaths of the country under lockdown, which included shuttering several large electronics production hubs. As COVID-19 spread across the world, nations began closing their borders, which destabilized the global semiconductor supply chain.
Samsung closed a South Korean plant due to a coronavirus outbreak, and its Vietnamese factories lost access to critical Sino made components. Similarly, Apple struggled to get parts made in Israel, Italy, Japan, and Malaysia to its assembly complex in Zhengzhou. Also, Huawei, which sells the majority of its handsets in China, encountered major production and delivery problems in Q1.
As the COVID-19 crisis worsened, the global economy began to contract, and consumers shied away from purchasing expensive smartphones. Consequently, worldwide handset shipments fell to a four-year low of 275 million units in the March ending period. IDC and Strategy Analytics pegged the year-over-year declines at 11 and 17 percent, respectively.
Individual Impacts and Q2 Outlook
As bad as things got in the first quarter, market researchers believe the coronavirus pandemic’s impact on the smartphone sector will precipitate an annual downturn. DigiTimes recently predicted mobile device shipments would fall 15 percent year-over-year due to COVID-19, while Strategy Analytics forecasts a 21 percent drop off.
However, IDC discovered the outbreak did not affect all manufacturers the same way in the last period.
The agency notes Samsung sent out 58.3 million devices in the first quarter, a drop of 13 million units from 2019. In its Q1 financial results, the South Korean conglomerate recorded a 5.7 percent dip in its IT and mobile communications unit, which it attributed to COVID-19. Even though the corporation is releasing several appealing handsets in Q2, its device income will probably continue to decline.
IDC stated Huawei’s smartphone shipments fell by 10.1 units in the March period, although Counterpoint Research said its Chinese sales rose by 6 percent. Two months ago, the conglomerate reportedly predicted a 20 percent yearly contraction in mobile device orders because of COVID-19 and losing access to Google’s Web services. Given the headwinds it is facing, the firm’s overall mobile device sales will almost certainly fall in the second quarter.
Surprisingly, the analytics organization found Apple’s global Q1 smartphone shipments decreased by less than 1 percent annually. In a recent interview, CEO Tim Cook noted his firm’s handset sales plunged in the first three months of the year but recovered in April. Despite offering no official Q2 outlook, the iPhone maker’s brand appeal could see it through the challenges presented by COVID-19.
While near-term consumer demand is impossible to predict, hopefully, 2020 will feature only one historically bad quarter for smartphone shipments.