Omdia: Cautiously optimistic about global smartphone market growth next year

The global smartphone market has gone through a process from supply shortage to oversupply and then to weak demand. Since 2020, the global economic development has experienced many uncertain factors and has intensified to this day: the technology trade war, the new crown epidemic, supply chain crisis, geopolitical conflicts and dollar inflation have followed one after another. The impact of these events is superimposed on each other and is gradually undermining the economic foundation of many countries in the world, especially emerging market countries and regions, which has led to weak demand in the consumer electronics market. The smartphone market is no exception. The length and total volume of the decline cycle in emerging markets far exceeds that of developed markets. According to the Omdia smartphone research report, the global market share of smartphones below US$250 has dropped from 63% in 2020 to 57% in 2022, and only 55% in the first quarter of this year. Low-end smartphones are still the foundation of the global smartphone market. Except for Apple, most smartphone manufacturers have a large proportion of low-end phones. The continued decline of the low-end market has made high growth expectations hopeless. Smartphone manufacturers have shifted from previous aggressive expansion to steady defense. This year, everyone has reduced market investment, abandoned marginal businesses and focused on core businesses, reduced staffing and controlled various expenses in order to ensure their current profitability.

According to Omdia's latest forecast in June, global smartphone shipments are expected to reach only 1.144 billion units in 2023, a year-on-year decrease of 5.2%. Compared with the forecast in May, we have lowered the forecast by nearly 27 million units. In its previous forecast report, Omdia was already very conservative about the shipment expectations of Chinese mobile phone manufacturers in 2023. This time the reduction was mainly due to Apple and Samsung, because they respectively lowered their production plans. Due to Apple's iPhone 14 and iPhone 14 Plus sales not meeting expectations, as well as supply problems with components for the new iPhone 15 series, global iPhone shipments are expected to decline again this year. Samsung is facing inventory problems that have not yet been fully resolved and weak demand in emerging markets, and is also constantly lowering its smartphone production and shipment plans. China's mainstream smartphone brands seem to be facing a more complicated situation. In addition to inventory issues, compared with Apple and Samsung, their market coverage is more concentrated in the local market and the Asia-Pacific region. However, the Chinese market has not ushered in the expected recovery after the epidemic control was relaxed this year, which will seriously affect their growth expectations. Secondly, in the overseas Asia-Pacific market where they focus on covering, especially in the Indian market, which accounts for nearly 40% of the market share, demand continues to be weak, and Chinese companies face more government regulation in India. OPPO, vivo and Xiaomi have encountered strict tax audits in India and face huge fines. Xiaomi's development in the Indian market this year is particularly difficult, and it recently announced a large number of layoffs in India. The decline in smartphone shipments in the Indian market has dragged down Xiaomi's global smartphone shipments. In addition, patent issues are also a constraint on the development of Chinese brands overseas. OPPO and vivo lost the patent dispute with Nokia, forcing them to give up most of the major markets in Western Europe, making their previous huge investments and market achievements come to naught, and it seems that their patent dispute with Nokia has a tendency to expand to other markets. The North American market is a market forbidden zone for China's mainstream smartphone brands. Latin America seems to have become the most suitable market for them to seek new growth, but due to the limitations of its market size and the existing brand structure, their growth is still limited in the short term.

Currently, Omdia is cautiously optimistic about the growth of the global smartphone market next year. The growth of the global smartphone market is facing multiple obstacles, and the impact of these obstacles is long-term and wide-ranging. Emerging markets are the main engine driving the growth of the global smartphone market, but they also have weak economic foundations and poor risk resistance. Once they are damaged during the global economic counter-cyclical development, it will be difficult to recover in the short term, which will affect their consumption allocation and suppress the demand for smartphones. The increasingly unstable market operating environment has made mobile phone companies dare not take risks and prefer more stable and conservative goals.

But we also need to see some positive factors:

First, the economies of most countries in the world are slowly recovering after experiencing complex impacts, and consumption willingness will also be improved;

Secondly, after more than a year of inventory adjustments throughout the entire supply chain, all smartphone brands will enter a normal shipping rhythm, which will also bring about the possibility of an increase in smartphone shipments;

Finally, emerging markets have made leapfrog developments in communication technology. They have skipped fixed-line communications and entered the mobile Internet era directly. The development of mobile Internet applications in emerging markets is in full swing and is penetrating into all aspects of people's lives. The necessity of smartphones in the daily lives of consumers in emerging markets is increasing. In addition, with the rapid decline in mobile data charges, the cost of using mobile services for users is gradually decreasing. The priority of smartphone consumption in emerging markets has been improved, resulting in some rigid demand. This is a very important positive factor.