BackGlobal smartphone market seen falling 2.3% in 2020 due to coronavirus: IDC
Component shortages, factory shutdowns, quarantine mandates, logistics, travel restrictions will hit salesMarket likely to bounce back in 2021, with 5G smartphones fuelling growth
PremiumNEW DELHI: A prolonged shutdown of factories in China and a consequent disruption of supplies following the outbreak of COVID-19, commonly referred to as coronavirus, will lead to a 2.3% decline in the global smartphone market, with shipments seen over 1.3 billion units.
Smartphone sales in the first half of 2020 are expected to fall 10.6% year-on-year, according to a forecast by International Data Corporation (IDC).
“COVID-19 became yet another reason to extend the current trend of smartphone market contraction, dampening growth in the first half of the year. While China will take the biggest hit, other major geographies will feel the hit from supply chain disruptions," said Sangeetika Srivastava, senior research analyst at IDC, in a statement.
"Component shortages, factory shutdowns, quarantine mandates, logistics, and travel restrictions will create hindrances for smartphone vendors to produce handsets and roll out new devices."
While global smartphone shipments will likely exhibit a U-shaped recovery from the second half of the year, actual sales could present a different picture given the seasonal nature of shipments.
The market is likely to bounce back in 2021, with 5G smartphones fuelling growth. China's domestic market is likely shrink nearly 40% year-on-year in the first quarter.
Srivastava feels the market will likely stabilize beginning third quarter of 2020 as the COVID-19 situation hopefully improves and 5G plans pick up pace globally.
According to IDC, current forecasts factor in the possibility of a multi-quarter recovery for manufacturing and supply chain following the gradual return of Chinese workers to factories. Also, China's demand shock, despite getting extended to several quarters, will be mitigated by the end of the year with government-backed stimuli and subsidies.
Demand in neighbouring regions will also remain suppressed for a brief period.
Global smartphone market has been suffering a lean phase, with three consecutive years of falling shipments. Volumes in 2019 were below those seen 2015 and 2018. The outbreak is expected to stretch the lean phase to another year.
“Buyers will purchase from online channels, which will account for a significantly increased share of smartphones sold in the first half of 2020 and may represent a permanent shift in buying behaviours," Will Wong, research manager with IDC Asia Pacific client devices group, said in a statement.
Elaborating on the impact of the virus and shutdown on the entire ecosystem, the IDC report suggests that small and medium enterprises in the phone industry, especially retail channel partners, will be severely affected.
However, there is an opportunity for phone vendors that can effectively help retail channels and other partners recover and re-consolidate after the epidemic is over.
Apple, which replaced Samsung as the number one global smartphone vendor in October-December 2019, recently changed its quarterly guidance for the March quarter. Apple told investors that it does not expect to meet the March quarter revenue target provided in January 2020.
Declared a "public health emergency of international concern," by the World Health Organization, COVID-19 has so far claimed 2,800 lives and infected over 83,000 people worldwide.
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