Inflation and low confidence are tightening purse strings
Global mobile phone shipments are set to grow by a mere 2.9% in 2022, a reflection of ongoing component supply problems, global economic woes and fallout from the war in Ukraine. A total of 1.64 billion mobile phones are forecast to ship this year, with smartphones expected to reach 1.39 billion units — achieving year-on-year growth of 4.2%. These figures are based on CCS Insight’s own forecast (see Market Forecast: Mobile Phones, Worldwide, 2022-2026); For more information, please contact us).
The market in 2022 is set to see slight recovery following a difficult 2021, when a shortage of components severely affected manufacturers’ ability to meet demand. Although an expected improvement in supply conditions is great news for the market, phone-makers will now face weak demand thanks to a tough economic environment. This grim outlook is expected to produce the third year of weak sales since 2020, reducing demand for mobile phones in advanced and developing markets.
Although we forecast some growth in mobile phone sales for 2022, the global market faces a period of higher inflation, limited economic growth and changing consumer buying behaviours. All these are set to limit mobile phone upgrades and adoption by new users. There’s an expectation that people in Western markets will now prioritize holidays, dining out and other in-person experiences, holding onto their mobile phones for longer. Manufacturers have a difficult choice on their hands: protect profit margins or reduce prices to stimulate demand.
The Russian invasion of Ukraine has further complicated a difficult economic year, with the impact on mobile phone sales expected to be felt worldwide. Sales are expected to decline by 15% in Eastern Europe over 2022; this will have a knock-on effect on recovery in Western Europe. The war has led to energy prices increasing worldwide, alongside higher food costs that risk raising poverty levels in developing economies. The resulting economic turmoil will weaken appetite for replacing mobile phones and limit further adoption in less affluent markets.
This will be a tough year, but there’s hope ahead if the global economy manages to navigate the current trouble. A 3.8% growth in overall demand for mobile phones is forecast in 2023, fuelled by 6.4% growth in smartphones in the year. Mobile phone shipments are on track to exceed pre-pandemic levels by 2025, driven by growth in India and emerging markets in Asia, Africa and the Middle East — as well as recovery in Eastern Europe. Particularly in emerging markets, many people will have their aspiration to buy a mobile phone for the first time delayed but not lost; we expect to see this reflected in a further wave of adoption over the next five years.
Factors remain that may further affect the mobile phone market, such as the impact of the war in Ukraine on supply and demand. There are also risks of supply disruption because of China’s “zero Covid” policy, an even more sluggish global economy and a burgeoning second-hand smartphone market vying for people’s attention against brand-new handsets.
Although overall demand in 2022 is expected to be muted, growth in 5G mobile phone sales continues. In 2022, we forecast 709 million 5G mobile phones to ship, representing 43% of the market and aided by more affordable 5G smartphones launching toward the end of the year. By 2026, 75% of the 1.88 billion mobile phones sold in the year are forecast to include 5G, totalling 1.41 billion.
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