October 19, 2021
The supply chain crisis is certainly making a dent on smartphone shipments but the 5G outlook is unchanged.
A slew of fresh data from industry analysts confirms that smartphone brands are feeling the pain but consumers are still flocking to high-end phones. According to Canalys, total smartphone shipments fell 6% in Q3 thanks primarily to the chip shortage, while Counterpoint Research has cut its second half growth forecast from 9% to 6%.
Counterpoint estimates 90% of the industry is affected, with some OEMs and vendors reporting they had only received 80% of their requested volumes on key components during Q2. "Some smartphone makers are now saying they are only receiving 70% of their requests, creating multiple problems," it added.
Canalys Principal Analyst Ben Stanton said chip-makers had hiked prices to deter over-ordering and to try to close the gap between demand and supply. "But despite this, shortages will not ease until well into 2022. As a result of this, as well as high costs of global freight, smartphone brands have reluctantly pushed up device retail pricing," he said.
Cut your cloth
It's not just smartphones. The semiconductor shortage has also trimmed 5G FWA growth because of the lower output of terminal devices, Counterpoint has revealed. Even Apple has been caught in the bottlenecks, with the company expected to slash 2021 production targets for the new iPhone 13 by up to 10 million units, Bloomberg has reported.
In Asia, Apple customers are typically having to wait a month for their iPhone 13 orders to arrive, a source told Light Reading. The supply chain squeeze has been pushing wholesale prices higher, too. Strategy Analytics says they've spiked 11% this year to $310, the highest increase since 2012.
But while component shortages are one reason, the price hikes are also a result of positive industry factors, like the migration to 5G and innovations such as Samsung's foldable phone.
Anxious operators can also take heart from the news that the biggest growth is of smartphones in the upper price range. At the current stage of the 5G cycle it is the high-end phones with new features that operators are banking on to spur adoption. And that's where the market is going. Linda Sui, senior director at Strategy Analytics, said this year the iPhone 12, Samsung and other premium devices have been driving the market, with an additional boost from the iPhone 13.
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Light Reading. "We forecast the '$600 and above' price tier will grow 34% year-on-year by volume and 48% year-on-year by revenue, significantly outperforming the overall market and other price bands," Sui said. The trend to 5G migration is evident in China, too. In August total mobile shipments were down 10% year-on-year, but 5G phone sales were up 10%, accounting for 73% of all devices shipped. The phones may be a little more expensive, and take longer to arrive, but there's no sign the supply shortages are holding back demand for premium 5G smartphones. Related posts: Smartphone vendors love 5G, but supply chain problems loom 5G smartphones making market-share strides – Omdia China 5G device sales slow Huawei down, LG out, but smartphone market on the up — Robert Clark, contributing editor, special to Light Reading
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