Global Smartphone Sales Plunge Amid Inflation and Chinese Lockdowns

Global Smartphone Sales Plunge Amid Inflation and Chinese Lockdowns

Sales declined month-over-month for the second straight month, and year-over-year for the eleventh straight month.

According to a report this week from research firm Counterpoint Research, sales of smartphones dropped significantly in the month of May, falling 4 percent month-over-month and 10 percent year-over-year, and dropping below the 100 million mark.

Sales declined month-over-month for the second straight month, and year-over-year for the eleventh straight month, the firm said. The drops were attributed to the usual suspects: inflation, continuing supply chain issues in China, and the crisis in Ukraine.

Overall, smartphone sales have continued to be volatile.

“The demand for a smartphone especially in the advanced economies is driven by replacement, which makes it a discretionary purchase,” Research Director Tarun Pathak said in the release by Counterpoint. “And inflationary pressures are leading to pessimistic consumer sentiment around the globe with people postponing non-essential purchases, including smartphones. The strengthening US dollar is also hurting emerging economies. A segment of consumers is likely to wait for seasonal promotions before purchasing to offset some of the cost pressures.”

“China’s lockdowns and prolonged economic slowdown has been hurting domestic demand as well as undermining the global supply chain,” Counterpoint’s senior analyst Varun Mishra said in the release.

“The smartphone market in China recovered slightly month on month in May as lockdowns eased, however, it remained 17% below May 2021. There may need to be a new baseline market size defined for China's smartphone market. Added to this is the uncertainty created by the Russia-Ukraine crisis, which is hurting demand in Eastern Europe. None of the OEMs seems to be spared from the negative impact on demand caused by a mix of these factors."

A report last month from IDC, while of the entire first quarter instead of one particular month, revealed a worldwide decline of 8.8 percent in smartphone shipments in the first quarter. That report had Samsung in the lead with a 23.7 percent market share, followed by Apple with 18 percent, and Xiaomi with 12.7 percent. However, the “other” category beat out them all with 28.9 percent.

IDC reported separately in early June that shipments of smartphones worldwide were expected to decline 3.5 percent to 1.31 billion units in 2022. Previously, the firm had projected growth.

“The smartphone industry is facing increasing headwinds from many fronts – weakening demand, inflation, continued geo-political tensions, and ongoing supply chain constraints. However, the impact of the China lockdowns – which have no clear end in sight – are far greater,”  Nabila Popal, research director with IDC’s Worldwide Mobility and Consumer Device Trackers, said in that release.

“The lockdowns hit global demand and supply simultaneously by reducing demand in the largest market globally and tightening the bottleneck to an already challenged supply chain. As a result, many OEMs cut back orders for this year, including Apple and Samsung.”

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist, and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters.