Supply Chain Crisis Affecting Mobile Phone Market

Every sector of the economy is being impacted by the COVID-19 pandemic, and cellphones are no exception. Due to the influence of social isolation on customer usage habits, the smartphone industry has experienced manufacturing disruptions as well as significant changes in usage patterns. Smartphones, however, could assist in identifying coronavirus exposure risk, testing for the virus, and possibly even developing cures for it.

Between 2020 and 2024, the worldwide smartphone market has the potential to increase by about  64 million units. APAC dominated the market in 2019 and will do so again over the next few years thanks to its substantial population, rising standard of living, and expanding telecoms infrastructure. However, both the supply chain and customer demand will have an immediate impact on the sector. Due to the fact that many smartphone manufacturers are based in China and depend on it for component supplies, the coronavirus pandemic has caused delays. Additionally,  as individuals save money for necessities or buy PCs and tablets so they can work and learn from home, demand for smartphones is declining.

A Setback for 5G Technology

The coronavirus pandemic, which was starting to gain pace in the worldwide market, is expected to have a significant impact on the expansion of 5G devices, according to some analysts. The creation of affordable 5G phones, which are required to promote widespread use of the technology,  will be hampered by delays in production and lower demand. The market penetration of 5G devices will be hampered by the decline in demand for all smartphones.

Huawei introduces new phones during a pandemic

Huawei last month unveiled a new line of premium smartphones despite the failures and ambiguity. Due to a US trade embargo, the P40 devices do not support Google services like  YouTube, Google Assistant, and the Play Store, which will limit their appeal outside of China.  However, because Huawei had already been focusing on the Chinese market before the pandemic and was preparing to confront a difficult year, it may be more equipped to deal with the coronavirus impact than its rivals. Companies like Sony and LG might experience a longer period of adjustment in the global smartphone market.

Researchers develop smartphone-based Covid-19 test

Scientists are currently developing a new method for smartphones to aid in the coronavirus defense. A virus test being created by Silicon Valley startup Luminostics and pharmaceutical company Sanofi can be used with any type of smartphone. It consists of a phone add-on and an app that conducts the test and records the findings. The test device connects to the phone’s camera and flash and has chemicals inside that, when the virus is present, glow in the dark. By the end of the year, the test should be accessible.

Post Carona effect on the mobile phone industry

Sales of smartphones are about to decrease. A recent analysis claims that the mobile phone industry is about to experience a recession. The record-high inflation rate, the chip shortage, and the multiple lockdowns declared in China are the main causes of this decline in sales. A well-known analytics company, International Data Corporation (IDC), has unveiled its newest smartphone market study. The analysts forecast a reduction in turnover of 3.5% throughout the course of the year based on the data they have gathered. IDC predicts that only 1.31 billion phones will be sold globally. According to Strategy Analytics, sales of smartphones worldwide will decline by 2%.  Every brand is impacted.

The analysis company blames record-high inflation for supporting its predictions. Over the course of a year, inflation in the eurozone was 8.1 percent. With an increase of 6.6 percent in a single year, inflation in the US has accelerated at its fastest rate in 40 years. The demand for new cellphones is projected to decrease as a result of the drop in purchasing power.

Lockdowns in China reduce smartphone  sales

According to Nabila Popal, research director at IDC, “the smartphone industry faces mounting headwinds on many fronts — dwindling demand, inflation, ongoing geopolitical tensions, and ongoing supply chain constraints,” referring in particular to the war in Ukraine, which continues to rage despite agreements with Russia. These are primarily production issues that will impact the mobile phone market, according to IDC.

Several factories in the Shanghai area have been rendered inoperable by the lockdowns China has announced. Several Apple suppliers, including Pegatron and Foxconn, had to temporarily shut down their production facilities. There were substantial interruptions to iPhone production.

The world’s largest market (Editor’s Note: China) saw less demand as a result of the lockdowns,  which further tightened the bottleneck of an already flimsy supply chain, according to IDC.

The Chinese government’s announcement of lockdowns further adds to the chip shortage.  Semiconductor production lines have continued to be backed up ever since the Covid-19 crisis.  Even with the addition of new plants, producers are still unable to satisfy brand demand. IDC  predicts that “ongoing supply issues with semiconductors will alleviate in the second half of 2022,”  nonetheless. Manufacturers of smartphones have revised their 2022 sales projections in response to the market’s contraction. A leak from a few days ago showed that Apple anticipates selling 20  million fewer iPhones than anticipated.

Despite the imminent release of the iPhone 14, the Cupertino business has informed its suppliers about extremely cautious sales projections. IDC confirms that despite China’s actions against  Covid-19, Apple is still the smartphone supplier that has been least impacted. The benefit for the  business is “more control over its supply chain.” The survey also states that Apple customers are less impacted by inflation’s loss of purchasing power. Samsung also came to the same conclusion.  The market leader, a South Korean business, intends to lower its yearly projections by 10% and aim for 270 million units sold, up from 300 million previously.

A strong comeback is expected from 2023

For the coming year, the IDC study is more upbeat. The analytical organization predicts that the telecommunications market’s recession will pass quickly. from 2023, the market should rebound in order to benefit from the conclusion of the computer chip scarcity. Global sales are predicted to rise by 5% in 2019 due in part to the high demand for 5G devices. IDC projects that by 2022, sales of 5G devices will account for 53 percent of all new shipments and increase by 25.5 percent annually to roughly 700 million units.

Brands like Apple and Samsung command the majority of the market in this sector. The first 5G capable iPhone, the iPhone 12, played a significant role in the development of 5G. The popularity of the 4G successor was influenced by the ranges and the iPhone 13’s success.

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