News: Markets
6 April 2020
Smartphone sales fall 14% in February
As COVID-19 takes its toll, market demand is fragile but global smartphone sales (sell-through) in February declined only 14% year-on-year, showing some resilience, notes market research firm Counterpoint. From the supply side, global smartphone shipments (sell-in) fell by a slightly greatly 18%, but again this was a lower-than-expected drop.
China (the initial epicenter of the epidemic) did show a huge 38% decline, but is showing signs of a rebound already. Overall, global smartphone sales in February showed weakness in many markets as consumers became cautious. But, with the growth of online channels, sales shifted from offline to online. Offline sales in China fell more than 50% during February, but this fall was partially offset by stronger online sales, so the overall drop of 38% was not so severe.
Sell-in shipments (smartphone supplies) were relatively weaker, but February is a traditional low period for production (especially if it coincides with the Chinese New Year, as was the case this year). Compared with a year ago, sell-in shipments fell 18%, though again, less bad than the industry feared.
“The global smartphone market is largely a replacement market, meaning that smartphones are a discretionary purchase,” notes VP & research director Peter Richardson. “Nevertheless, they are now seen as a vital part of daily life – especially so for those enduring extended periods of isolation or remote working. So, while people may delay purchasing due to the coronavirus pandemic, especially in the early part of the crisis when the disruption and uncertainty are both high, they will still replace their smartphone at some point. This means that sales will not be entirely lost – just delayed.”
In terms of the competitive landscape, the demand for Samsung smartphones remained stable due to the minimum exposure to the Chinese supply chain and China market demand, thus capturing 22% global smartphone market share in terms of sales volumes. Apple felt some impact from the supply-side during the month both in China in early February and outside of China in the latter half of the month, which affected its sales performance. However, China’s Huawei which has maximum exposure to the country from both supply and demand perspectives, actually performed well above expectations, selling more than 12 million smartphones during February, seeing just a 1% drop in global market share.
“While China and South Korea are gradually recovering, the worst is far from over for many other parts of the world,” notes senior analyst Jene Park. “The coronavirus pandemic is unprecedented in nature and scale, but there are historical parallels we can learn from and these give us confidence that the mobile communications sector can ride out this storm without too much damage in the longer term.”
