There are signs the smartphone market found a bottomThere are signs the smartphone market found a bottom
IDC reported that worldwide smartphone shipments declined 0.1% in Q3 2023. But Qualcomm's CFO said there are now 'early signs of stabilization in the global handset market' heading into 2024.
November 2, 2023
After more than a year of flagging growth and general pessimism, there are indications that the global smartphone industry is finally getting ready to recover.
"When you step back and kind of look at as we enter fiscal 2024, we're very happy with the early signs of stabilization in the global handset market," Qualcomm CFO Akash Palkhiwala said this week on the company's quarterly conference call, according to Seeking Alpha. Qualcomm remains one of the biggest chipset suppliers to the global smartphone industry, and counts heavyweights Samsung and Apple among its current customer base. "And so we are cautiously optimistic as we go forward with that stabilizing and the normalization of Android channel inventory, we are on a strong trajectory as we go through the year."
Qualcomm's surprisingly solid quarterly report this week pushed a number of financial analysts to offer similarly upbeat commentary.
"After 5 very painful quarters and 2 years of [year-over-year] smartphone declines coupled to substantial inventory correction it does look like we are now (thankfully) hitting bottom, and while some narrative headwinds (Huawei, Samsung share etc) still exist we may find that the market recovery/normalization off that trough may offset those eventualities," wrote Bernstein analyst Stacy Rasgon in a note to investors, according to Seeking Alpha.
Others agreed. "Although macroeconomic uncertainties linger as markets struggle with soft demand, inflation and geopolitical tensions, healthy inventory and the slower pace of decline are encouraging some vendors to increase shipments," wrote research firm IDC of the global smartphone market in a recent release.
IDC reported that worldwide smartphone shipments declined 0.1% year-over-year to 302.8 million units in the third quarter of 2023. According to research firm Omdia, it was the eighth-consecutive quarter of year-over-year decline in overall smartphone shipments. (Omdia and Light Reading are owned by the same parent company, Informa).
However, some smartphone vendors like Xiaomi and Transsion are seeing growth in some emerging markets. And that growth is leading to some market shifts. The Verge reported that China's Transsion – which offers phones carrying brands including Tecno, Itel and Infinix – recently overtook Vivo to become the world's fifth largest smartphone manufacturer.
Broadly, the signals point to some sunshine for the global smartphone industry. And that's important to the world's wireless network operators that in part rely on a steady appetite for new phones that require their network connections.
The details, and the US market
Qualcomm said it anticipates revenues in its next quarterly report to be between $9.1 billion and $9.9 billion – above most expectations. The company continues to supply chips to both Apple and Samsung, though both companies are working to develop their own chips as a way to reduce their reliance on Qualcomm.
But Qualcomm officials waved away those concerns. "We're happy with the partnership with Samsung," Qualcomm CEO Cristiano Amon said in response to a question on the topic. "We are proud of our ongoing relationship with Apple."
Qualcomm CEO Cristiano Amon. (Source: Qualcomm)
However, there are indications that an improved outlook on the global smartphone market might not extend to all parts of the globe. For example, research firm Counterpoint reported that third quarter smartphone shipments in the US declined for the fourth straight quarter amid weak consumer demand.
"Despite the carriers continuing to offer strong promotions through the quarter, upgrade rates at the carriers remained near record lows," Counterpoint's Jeff Fieldhack said in a statement. "We expect a seasonal rebound in upgrade rates during the fourth quarter, but they are likely to remain lower than in the same period last year. There is a large installed base of iPhone 11 and iPhone 12 users in the US that is likely to upgrade to the iPhone 15 series this year. But while we saw the usual high wait times for the iPhone 15 series at launch, they came back down to earth quicker than for the iPhone 14 series, which could signal that the slump in consumer smartphone demand will extend to the iPhone 15 in Q4 2023."
Recon Analytics analyst Roger Entner wrote that AT&T leads in the sale of new iPhones in the US, followed by Verizon and then T-Mobile.
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