Following an unprecedented slowdown last year, the smartphone market is now on its way to recovery. According to the latest forecasts by research firm Canalys, global smartphone shipments will grow 12 percent year-on-year (YoY) in 2021 to reach 1.4 billion units.
Smartphone shipments fell 7 percent YoY in 2020 due to the COVID-19 pandemic. The market showed signs of recovery towards the end of the year and early this year as the pandemic is subdued in most parts of the world. However, the smartphone industry is now feeling the after-effects of it. A sudden rise in demand for electronic and networking products during the pandemic has caused a component supply issue. There’s a global shortage of semiconductor chips right now, delaying the market release of many new devices.
But even with that bottleneck, Canalys expects smartphone shipments to grow in double-digits in 2021. This significant growth rate is also because the smartphone market had fallen to an unexpected low last year. That’s more evident when you look at the predicted shipment growth rate for the years to come. The firm suggests smartphone shipments will grow only about 5 percent YoY in 2022. That growth rate could further fall in subsequent years.
However, a too-low shipment volume in 2020 isn’t the only factor for a 12 percent YoY growth rate this year. The world hasn’t fully recovered from the COVID-19 pandemic yet. There are still travel restrictions in place in many parts of the world. As such, people have been unable to go on holidays as much as they used to do before this global health crisis struck. Many of them are now opting to spend their disposable income on a new smartphone.
5G is another driving force
The transition from 4G to 5G is rapidly gaining pace. Over the past few months, the 5G price point has come down drastically thanks to the introduction of affordable 5G chipsets like Qualcomm’s Snapdragon 480 and MediaTek’s Dimensity 700. Many vendors are even ready to sacrifice other features like display and camera to accommodate 5G at lower prices. Perhaps they are responding to the growing consumer demand for affordable 5G smartphones.
According to Canalys, 5G handsets accounted for 37 percent of global smartphone shipments in Q1 2021. This share could grow up to 43 percent for the full year. In figures, 610 million of the total 1.4 billion smartphone units expected to ship this year could be 5G-ready. Around 32 percent (195 million) of those will cost less than $300.
“It is time for mass adoption [of 5G],” says Canalys Research Manager Ben Stanton. The firm expects 5G smartphone shipments to overtake 4G smartphone shipments by the end of 2022 (52 percent vs 48 percent). The share of 5G smartphones could reach as high as 69 percent in 2023.
North American smartphone market has reached a tipping point?
Canalys also published a region-wise breakdown of smartphone shipment forecast and growth for 2021 and 2022. An important takeaway from this data is how the North American smartphone market is expected to decline 2 percent YoY in 2022 when global shipments are still expected to grow 5 percent.
The Asia Pacific region seemingly still has a big room for growth in smartphone shipments. It is the only market where shipments are expected to grow at a higher rate next year than this year. Here are Canalys’ forecasts for region-wise smartphone shipments and growth for the next two years: