The news: Global smartphone shipments declined 18.3% YoY in Q4, with 300 million units shipped globally, per IDC.
By the numbers: 1.21 billion smartphones were shipped in all of 2022, the lowest annual shipment total since 2013.
- Apple maintained its position as the leading smartphone maker in the world and shipped 72.3 million iPhones in Q4, down 14.9% YoY.
- Samsung saw shipments decline 15.6% YoY to 58.2 million units.
- “We have never seen shipments in the holiday quarter come in lower,” said Nabila Popal, research director at IDC.
A global problem: The plummeting demand for new devices worldwide will have a ripple effect across various regions.
- Smartphones are one of Korea’s largest exports due to the dominance of Samsung as an Android OEM.
- They are also a key source of income for Vietnam, where various phone and component factories assemble the devices.
- Apple, whose iPhone 14 supply was constrained by China’s factory closures, is looking to expand into India. Decreased demand could slow down expansion plans.
Smartphone industry faces challenges: The average length of phone ownership is increasing, with the majority of people holding on to their current model for more than three years, per IEEE.org. Expect demand for new smartphones to dwindle further in a down economy.
- Smartphone innovation has plateaued, with new devices offering incremental performance upgrades, slightly improved cameras, and larger displays.
- The transition to 5G was the last major innovation that required the adoption of new technologies.
- 5G markets are quickly saturating while emerging countries are still reliant on older 3G and 4G networks and aren’t likely to upgrade anytime soon.
- New form factors like foldables and dual-screen devices have not gained traction. Microsoft reportedly gave up on dual screens.
Key takeaway: The two areas that could wrestle the smartphone market from stagnating sales are pricing and innovation.
- The majority of smartphone profits come at the high end of the market. Very little disruption is happening in the entry-level and midrange.
- Innovation is a more difficult lever for smartphone makers who are now mostly focused on services and subscriptions rather than smartphone functionality.