Good Days Ahead for Smartphone Market
Despite supply pressure, smartphone shipments are set to grow 12% in 2021 to reach 1.4 billion units, finds a study
The global smartphone market will grow 12% in 2021, with shipments reaching 1.4 billion units, which represents a strong recovery from 2020, when shipments fell 7% due to major market constraints caused by the COVID-19 pandemic, according to the latest forecasts by Canalys. As vaccine roll-out continues around the world and the pandemic is subdued, component supply will emerge as the new bottleneck for the smartphone industry, said the technology market analyst firm.
“The smartphone industry’s resilience is quite incredible,” said Ben Stanton, Research Manager at Canalys. “Smartphones are vital for keeping people connected and entertained, and they’re just as important inside the home as outside. In some parts of the world, people have been unable to spend money on holidays and days out in recent months, and many have spent their disposable income on a new smartphone instead. There is strong momentum behind 5G handsets, which accounted for 37% of global shipments in Q1, and are expected to account for 43% for the full year (610 million units). This will be driven by intense price competition between vendors, with many sacrificing other features, such as display or power, to accommodate 5G in the cheapest device possible. By the end of the year, 32% of all 5G devices shipped will have cost less than US$300. It is time for mass adoption,” elucidated Stanton.
Component supply bottlenecks, however, will limit the growth potential of smartphone shipments this year. “Backorders are building,” said Stanton. “The industry is fighting for semiconductors, and every brand will feel the pinch,” he added. In recent months, vendors redirected some allocation to other regions due to the COVID-19 outbreak in India, but this is not sustainable as the world returns to normal. Vendors will first turn to regional prioritization, focusing the flow of units into lucrative developed markets such as China, the US and Western Europe at the expense of Latin America and Africa. But even in these better-served regions, they will still be constrained, and will then turn to channel prioritization, pushing a greater allocation
retailers to reassess their offline footprints. As a result, many stores will close this year, and for those that stay open, their purpose will be reimagined for customer support and
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