The global smartphone market is bracing for its steepest annual decline on record, with shipments expected to drop by 13.9% this year, according to a report by Counterpoint Research. This downturn is attributed to a worsening shortage of memory chips, a situation further aggravated by the ongoing conflict in Iran.
Impact on Budget Smartphones
The shortage is hitting the budget segment of the market hardest. As chipmakers prioritize production for AI-related technologies, entry-level smartphones are becoming less economical to produce. This shift has led to a 14% increase in global smartphone wholesale prices in the first quarter, while shipments have decreased by 3.1% year-on-year. Analysts predict that some models priced below $150 may soon vanish from the market.
Wang Yang, a principal analyst at Counterpoint, highlighted the challenges faced by manufacturers of low to mid-tier smartphones. “The question is no longer how to grow shipments or market share, but whether to remain in the market at all,” Wang stated. The inability to offset the impact of the chip shortage through pricing or product changes has left many manufacturers in a difficult position.
Premium Market Resilience
In contrast, the premium smartphone segment has shown greater resilience. Apple, for instance, reported record revenues in the first quarter, driven by upgrades to its iPhone 17 series. Counterpoint projects that Apple’s shipments will remain stable this year, with a potential 5% increase next year. The company’s stable chip supply and strong margins position it well to gain market share without significant price hikes.
Samsung Electronics has also managed to maintain steady volumes, with only a projected 4% decline in shipments for the year, outperforming the broader market. This stability is attributed to a consistent product lineup and reliable supply chains.
However, companies heavily reliant on the budget segment, such as Transsion, are expected to suffer significantly, with a forecasted 32% drop in shipments. Similarly, Xiaomi and Honor are projected to experience declines of 28% and 20%, respectively.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
