This archive report was first published on 6 June 2020.
As the COVID-19 pandemic continues to spread globally, the smartphone industry is bracing for a significant decline in shipments. According to market research firm IDC, global smartphone shipments are expected to drop by 12% in 2020, reaching 1.2 billion units.
This decline is attributed to lower consumer spending due to the economic impact of the pandemic. Lockdowns, rising unemployment, and economic uncertainty have reduced consumer confidence, causing people to prioritize essential goods over non-essential items like smartphones.
"The pandemic has had a significant impact on consumer spending, and as a result, we're seeing a decline in smartphone shipments," said Sangeetika Srivastava, senior research analyst at IDC. "This is a year-over-year drop in the history of our reporting, and it's unlikely to improve soon."
Many smartphone producers have been forced to shut down stores, and even virtual launches have become rare. Apple, for instance, has shut its retail stores in the US and Europe and introduced discounts on the iPhone 11 in China.
Analysts had expected 5G adoption to boost the industry, but the pandemic has likely delayed this trend until 2021. As a result, 5G handset prices may drop earlier than expected.
While China's economy has begun to reopen, IDC expects a single-digit decline in smartphone shipments this year. However, the research firm believes that upcoming 5G deployment will help the recovery of smartphone shipments next year, with growth expected to return in the first quarter of 2021.
"There's no question that challenges lie ahead for the smartphone industry," said Ryan Reith, IDC's research director. "The economic downturn will cause some fluctuation in the vendor and price-tier landscape, and the surge in consumer spending on devices like PCs and video game consoles will take a share of the consumer wallet that would have been put towards smartphone upgrades and 5G."
