Global Smartphone Shipments to Grow 5.3 Percent in 2021 Despite Supply Chain Issues: IDC

Global smartphone shipments will grow 5.3 percent year-over-year (YoY) by the end of 2021 despite supply chain issues, as per a forecast by International Data Corporation (IDC). In its latest report, the market research firm has predicted that there will be 1.35 billion smartphone shipments by the end of the year. It also says that since the shortage issues revolved around 4G components, 5G smartphones are poised to take the centre stage with 60 percent of the total worldwide smartphone shipments by 2022-end.

As per its Worldwide Quarterly Mobile Phone Tracker, IDC lowered the growth forecast for 2021 and 2022 due to the lower-than-expected third-quarter shipments and the continued component shortages and logistical challenges. It says that the shortage situation may not improve until mid-2022.

IDC says that it lowered its smartphone shipment growth forecast for 2021 from 7.4 percent to 5.3 percent and for 2022 from 3.4 percent to 3.0 percent. In the long run of five years, IDC predicts “a modest but healthy 3.5 percent five-year compound annual growth rate (CAGR)”. The firm claims that this shipment growth will be attributed to increased demand, reducing average sale prices (ASPs), and the continued transition from feature phones to smartphones.

“Although we expected a slowdown in the third quarter, the market declined by almost twice the projected rate as the supply chain and logistical challenges hit every major player in the market,” said Nabila Popal, Research Director with IDC's Mobility and Consumer Device Trackers.

When talking about the performance in various regions over the year, IDC says that all regions are forecast to see a single-digit decline, and significant decreases are expected in Asia Pacific (excluding Japan) and China. “The smartphone shipments will be down 9.1 percent in Asia Pacific (excluding Japan) and 8.4 percent in China on YoY basis,” IDC says.

The silver lining, as per the research firm, is that robust growth in the first half of 2021 in all regions except China will help paint a positive picture of overall growth this year.

On 5G smartphones, Popal said the most impacted vendors were the ones that had “a higher portfolio mix of 4G devices” and the ones that offer more 5G models were comparatively less hit. As mentioned above, this is because the supply chain issues surrounded 4G components according to IDC.

These “challenges have shifted our short-term forecast for Android more than iOS, which is now primarily 5G,” Popal added.

He also said that this shortage of 4G components, which may not become normal until mid-2022, will expedite the jump to 5G technology. IDC predicts that the ASP of 4G and 5G handsets will decrease through 2025.

“As with our previous forecast, 2021 will represent peak average selling prices as Android will end the year at $265 (roughly Rs. 19,900) while iOS climbs to a staggering $950 (roughly Rs. 71,300). However, moving forward, prices in the overall market will slowly fall as 5G devices will decline 14.5 percent in 2022 while 4G devices drop more than 18 percent next year as the market continues to shift towards 5G,” said Anthony Scarsella, research director with IDC's Worldwide Mobile Device Trackers.