In 2022, consumers shifted their spending from luxury items like high-end smartphones to more essential purchases like gas and food due to high inflation and a gloomy economic outlook for 2023. The industry experienced decreases in the fourth quarter that had yet to be witnessed in ten years, despite gains in market share from titans like Apple and Samsung.
Vendors of smartphones are already nursing their wounds following a dismal sales year overall. According to analysts at Canalys, global shipments for Q4 2022 decreased by 17 percent from Q4 2021. Sales for the entire year fell to less than 1.2 billion, an 11% decrease from the previous year. The worst result in the sector has been experienced in ten years.
Apple and Samsung performed marginally better than the competition, with the Cupertino powerhouse capturing 25% of the market to Samsung’s 20% – both increases in the sector. Xiaomi, Oppo, and Vivo, three Chinese makers, all suffered setbacks, dropping to 11, 10, and 8% market shares, respectively. Apple recently unveiled the iPhone 14 series, which helped it overtake Samsung’s market share—at least until the Galaxy S23.
Despite the increases in market share, all vendors have had a challenging year. According to Canalys Research Analyst Runar Bjrhovde, the tech industry has experienced a significant decline, and the economy is on the verge of a recession.
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“Throughout 2022, smartphone vendors have had difficulty operating in a challenging macroeconomic environment. The fourth quarter saw the poorest quarterly and yearly results in a decade. Low shipments in Q4 were caused by the channel’s extreme caution in adding new inventory.”
Through the holiday season, manufacturers were able to cut high-end stockpiles, but overall, “Q4 2022 stands in stark contrast to Q4 2021’s” high demand and waning supply restrictions. Even low- to mid-range product demand dropped significantly in the first three quarters. People in 2022 were less interested in upgrading to the newest and greatest technology and more worried about paying their mounting bills.
Canalys anticipates OEMs would prioritize profitability and cost-cutting during 2023 while defending their market position. It foresees, at best, little sector growth, with the potential of flat sales in the coming year.
Although inflationary pressures will progressively subside, the market’s potential will be restricted by the consequences of interest rate increases, economic slowdowns, and an increasingly precarious labor market, according to Research Analyst Le Xuan Chiew. Markets that are saturated and dominated by mid to high-end products, like those in Western Europe and North America, will suffer as a result.
According to Chiew, only Southeast Asia is predicted to experience considerable positive growth, which will happen in the second half of 2023.
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