Shipments hit a plateau of about 2 billion units a year for the next five years
Smartphones continue to grow as a proportion of all mobile phone shipments,
but lack of innovation prompts buyers in mature markets to delay purchases
Looming component shortages and associated price hikes
will put pressure on smaller smartphone makers
London, 26 September 2016: CCS Insight’s latest global forecast for mobile phones confirms that the market has peaked at about 2 billion units per year after decades of growth.
The research firm expects than in 2016 shipments of mobile phones will slip 1.3 percent from their level in 2015, with most markets experiencing a difficult year. A notable exception is China, where the market is recovering from a very weak 2015; however, echoing the global trend, total shipments in the country are expected to stabilise at about 450 million units a year until 2020.
Marina Koytcheva, Director of Forecasting at CCS Insight, noted, “After years of analysts and commentators talking about mobile phone market peaking within the visible horizon, it has now reached that point”.
CCS Insight’s forecast shows that smartphones remain the powerhouse of mobile phone shipment volumes. They continue to grow as a proportion of the total market and will account for almost three-quarters of the market in 2016, rising to nearly 90 percent in 2020. In 2016, 1.42 billion units are forecast to ship, up 4.1 percent from 2015.
However, CCS Insight believes the pressure on smaller phone makers is increasing. Koytcheva continues, “As growth is depleting, competition is intensifying and it comes as little surprise that margins are being squeezed harder than ever. Companies without the scale advantages of manufacturers such as Samsung, Apple or Huawei will find it much harder to make money”.
CCS Insight expects the situation to be exacerbated by reports of component price hikes in the second half of 2016, stemming from shortages of screens, camera modules and memory. Shortages are the result of a combination of the biggest names snapping up all available output and recent earthquakes in Taiwan that have disrupted production.
Koytcheva cautions, “This is the first time we have seen component price rises for years. Phone makers with low volumes will find it almost impossible to turn a profit in these conditions without raising the prices of their products. It’s a great opportunity for the big players like Huawei and Samsung to exploit their scale, apply pricing pressure and strengthen their leading positions.”
Another notable finding from the new forecast is the impressive speed of adoption of LTE. Devices with this technology will account for 1.11 billion units in 2016, rising to 1.65 billion units in 2020, or 83% of total mobile phone shipments.
This latest forecast update also includes 5G-capable mobile phones for the first time as commercial 5G networks are expected to launch in volume in 2020. Although 5G networks are likely to launch before this time frame, we expect many to be designed for fixed-wireless usage and launch ahead of standards from 3GPP. We expect devices compliant with 3GPP Release 15 to only reach measurable volumes from 2020. They will represent the growth story for the next decade.
Notes to editors
These findings are taken from CCS Insight’s Market Forecast: Mobile Phones Worldwide 2016-2020.
About CCS Insight
CCS Insight is a global analyst company focussing on mobile communications and the Internet. It provides comprehensive services that are tailored to meet the needs of individual clients, helping them make sense of the connected world. Follow @CCSInsight on Twitter or learn more at www.ccsinsight.com.