The latest data from Canalys shows that smartphone shipments grew 12% in 2021 despite the ongoing chip shortages
After seeing a dip in smartphone sales in 2020 due to the onset of the coronavirus pandemic, the industry has rebounded significantly in 2021.
Now, the latest forecast from Canalys shows that the smartphone market will grow 12% in 2021, with shipments reaching around 1.4 billion units. This represents a significant bounce back from 2020, when shipments fell by 7% under the various impacts of the pandemic.
Hopefully, many of these pandemic-specific pressures will soon be a thing of the past, with global vaccination efforts seeking to rapidly curb the coronavirus and allow growth to continue unhindered.
“The smartphone industry’s resilience is quite incredible,” said Canalys Research Manager Ben Stanton. “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.”
Part of the driving force for growth here is attributed to the growth of 5G, which is becoming not only increasingly available around the world, but also increasingly prioritised by manufacturers.
“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,” said Stanton. “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.”
However, the coming year will not be without its challenges. A major semiconductor supply shortage began in 2020 and this crisis will be slow to abate, leaving many manufacturers prioritising shipments to the most lucrative regions (Western Europe, the US, China) and leaving other markets (Latin America, Africa) to go without.
“Backorders are building,” said Stanton. “The industry is fighting for semiconductors, and every brand will feel the pinch.”
The supply crisis will not only affect the vendors’ timelines, but also their pricing. As chipsets increase in value, vendors need to make a choice.
“As key components, such as chipsets and memory, increase in price, smartphone vendors must decide whether to absorb that cost or pass it on to consumers,” explained Canalys VP of Mobility Nicole Peng.
Ultimately, however, it must be remembered that this crisis is primarily driven by the rapid increase in demand for digitalisation that the pandemic has entailed and that this new level of demand is here to stay.
“The new normal for the smartphone industry is as ruthless and competitive as the old one,” said Stanton.
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