Smartphone shipments have suffered the worst decline globally to 18.3 per cent year over year (YoY) in the fourth quarter (Q4) of 2022, a report by International Data Corporation (IDC) said on Friday. India’s smartphone shipments also declined 9 per cent YoY in 2022, data from Counterpoint Research showed.
Low demand and inflation affected global smartphone shipments
IDC’s Worldwide Quarterly Mobile Phone Tracker report added that the drop in global smartphone shipments marks the largest-ever decline in a single quarter and contributed to a steep 11.3 per cent decline for the year. Last year ended with shipments of 1.21 billion units, which represents the lowest annual shipment total since 2013 due to dampened consumer demand, inflation and economic uncertainties.
“We have never seen shipments in the holiday quarter come in lower than the previous quarter. However, weakened demand and high inventory caused vendors to cut back drastically on shipments,” Nabila Popal, Research Director, IDC’s Worldwide Tracker team, said in a statement.
“Heavy sales and promotions during the quarter helped deplete existing inventory rather than drive shipment growth. Vendors are increasingly cautious in their shipments and planning while realigning their focus on profitability. Even Apple, which thus far was seemingly immune, suffered a setback in its supply chain with unforeseen lockdowns at its key factories in China. What this holiday quarter tells us is that rising inflation and growing macro concerns continue to stunt consumer spending even more than expected and push out any possible recovery to the very end of 2023.”
The total smartphone shipments in the holiday quarter of 2022 stood at 300.3 million units.
“We continue to witness consumer demand dwindle as refresh rates climb past 40 months in most major markets. With 2022 declining more than 11 per cent for the year, 2023 is set up to be a year of caution as vendors will rethink their portfolio of devices while channels will think twice before taking on excess inventory,” said Anthony Scarsella, Research Director, IDC’s Worldwide Quarterly Mobile Phone Tracker.
Premium smartphone segment in India hit double-digit in 2022 for the first time
The premium smartphone segment (upwards of Rs 30,000 or $365) contributed 11 per cent to India’s overall smartphone shipments and added 35 per cent to market revenue last year, which is the highest ever in history. Handset makers Samsung led the market last year in terms of shipment value with a 22 per cent share, followed by Apple.
“Consumer demand started declining from the second quarter when the global economy was crippled by multiple macroeconomic issues like all-time high inflation, rising unemployment and geopolitical conflicts, affecting India’s economy as well. Inventory build-up across channels after the second quarter led to lower-than-expected shipments throughout the second half of the year.
“We believe that the inventory and demand situation will continue to affect the market in the first half of 2023 before improving in the latter half driven by the festive season and upgrades to 5G devices,” said Prachir Singh, Senior Research Analyst, Counterpoint Research.
Samsung, Apple drivers of India market revenue
Overall, the India smartphone market revenue remained flat despite a decline in shipments. Samsung led the India market revenue with 20 per cent share driven by its premium smartphone models, especially the Galaxy S22 series and the company increased its share in the premium segment and re-captured second position.
Apple rose from the fourth spot in 2021 in terms of revenue share and captured the second position last year. The iPhone 13 captured the top smartphone model spot in 2022.
“Despite declining shipments, the premium smartphone market’s share kept rising in 2022 and reached 11 per cent, the highest ever. This paradoxical trend implies that India’s smartphone market is moving from being volume-driven to value-driven. While entry-tier and budget segments were most affected, the premium segment remained immune and showed double-digit growth,” said Shilpi Jain, Research Analyst, Counterpoint Research.