Global Smartphone Market Hit Hard By Covid 19 Outbreak

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The coronavirus outbreak wrecked broad swaths of the global economy in the first quarter as governments pursued extreme measures to combat the spread of the disease. With tens of millions of people around the world losing their jobs, buying a new smartphone simply isn't a priority, particularly compared to essential items.

As analysts had expected, the global smartphone market took a major hitĀ from COVID-19 last quarter.

iPhone SE in black

Apple launched the second-generation iPhone SE after the first quarter closed. Image source: Apple.

The biggest decline ever

Gartner estimates that smartphone sales fell by 20% in the first quarter to 299.1 million, marking the biggest drop in history. The outbreak disrupted the smartphone supply chain, which is concentrated in China, while simultaneously hurting demand as spending shifted toward consumer staples.

"The coronavirus pandemic caused the global smartphone market to experience its worst decline ever," Gartner senior research analyst Anshul Gupta said in a statement. "Most of the leading Chinese manufacturers and

Apple (NASDAQ:AAPL) were severely impacted by the temporary closures of their factories in China and reduced consumer spending due to the global shelter-in-place."

Among the top five vendors, only China's Xiaomi was able to maintain stable volumes thanks to sales of its affordable Redmi devices in international markets, according to Gartner. Xiaomi has also long maintained a strong e-commerce presence. Note that Gartner's figures are based on sales to end users (sell-through), as opposed to shipments into distribution channels (sell-in).

Vendor

Q1 2020 Units

Q1 2020 Market Share

Growth (YOY)

Samsung

55.3 million

18.5%

(22.7%)

Huawei

42.5 million

14.2%

(27.3)

Apple

40.9 million

13.7%

(8.2%)

Xiaomi

27.8 million

9.3%

1.4%

OPPO

23.9 million

8%

(19.1%)

Others

108.6 million

36.3%

(24.2%)

Total

299.1 million

100%

(20.2%)

Data source: Gartner. YOY = year over year.

Samsung had already built up channel inventory and lacks strong online sales capabilities, but the South Korean tech conglomerate was able to avoid significant supply chain disruptions since its manufacturing facilities are located outside of China. China's Huawei took the biggest hit but struggles to gain traction outside of the Middle Kingdom.

Apple reported first-quarter results a month ago, after warning investors in February that it would miss its guidance due to the crisis. That included a 7% revenue decline in the core iPhone segment. Apple no longer discloses unit volumes, and its revenue metrics are based on channel sell-in, so the figures cannot be directly compared to Gartner's unit estimates. At the time, CEO Tim Cook said that the company had mostly overcome the supply chain challenges near the end of March.

"Apple had a strong start to the year thanks to its new product line up that saw strong momentum globally," Gartner research exec Annette Zimmermann added. "If COVID-19 did not happen, the vendor would have likely seen its iPhone sales reached record level in the quarter."

Source : https://www.fool.com/investing/2020/06/02/the-smartphone-market-took-a-major-covid-19-hit-in.aspx

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