Smartphone market shows signs of recovery

Recent analyst reports indicate the smartphone market is leaving its deep pandemic funk as consumer spending on electronics rises and Chinese manufacturing returns to normal.

Smartphone shipments and sales improved significantly in the third quarter, as Chinese manufacturers recovered from the pandemic's damage, and consumers in developed nations spent more on electronics.

IDC reported that year-over-year global smartphone shipments to retailers were down only 1.3%, while Gartner said sales to consumers fell 5.7%. The respective numbers were an improvement from the first two quarters of the year, when the firms reported back-to-back double-digit percentage drops.

Gartner and IDC said their Q3 figures were better than expected, leading both firms to raise their market forecasts. IDC predicted smartphone shipments would increase by 2.4% in the fourth quarter and continue rising for several years. Gartner pegged growth to begin sometime in 2021.

Gartner analyst Anshul Gupta attributed the moderate recovery in the smartphone market to pent-up demand from previous quarters. Also, Chinese manufacturers ramped up production as the country brought the COVID-19 pandemic under control.

On the demand side, smartphone sales benefited from the overall increase in consumer spending on electronics during the pandemic, IDC analyst Ryan Reith said. Instead of dining out or traveling, people in developed nations bought game consoles, PCs, smartphones and TVs.

"One might think, while people are in this situation, they might tighten up their wallets," Reith said. "It looks like, in many developed markets, people are spending."

Smartphone market
Smartphone sales beat expectations in the third quarter.

Gartner expected Q4 sales to fall below pre-pandemic levels. Nevertheless, "growth in 2021 is expected to recover much of the 2020 losses," Gupta said.

Two of the top five smartphone vendors saw sales growth in the third quarter, according to Gartner. Samsung, the quarter's top manufacturer, sold 2.2% more phones than it did in the third quarter of 2019. Chinese manufacturer Xiaomi's year-over-year sales skyrocketed 34.9%, making the company the No. 3 smartphone vendor globally. It moves ahead of Apple, whose sales were down 0.6%.

The delay in releasing the 5G iPhone hurt Apple sales in the third quarter, analysts said. The company usually releases new phones in September, but the pandemic forced Apple to delay the launch until the fourth quarter.

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