Smartphone shipments decline despite growth in 5G devices

Indian smartphone shipments declined for a third straight quarter, amid supply constraints and a lack of demand in the industry. Data from International Data Corporation (IDC) India’s quarterly smartphone market tracker stated that the overall Indian smartphone market declined by 4.8% year on year (YoY) in the first quarter of the year (Q1 2022).

The decline in shipments comes despite a sharp growth in adoption of 5G smartphones in the country. Navkendar Singh, research director for mobile devices at International Data Corporation (IDC) India, told Mint that 5G smartphone shipments in India grew by 300% YoY in Q1 2022. Upasana Joshi, research manager at IDC India added that 31% of all smartphones shipped during this quarter were 5G phones, with their average selling price (ASP) being about Rs 29,000.

Singh said that the growth in 5G phones is a result of wider availability of 5G chips across price points, as well as a natural evolution of technology originating in China. Joshi added that with supply constraints easing up, by the end of 2022, all smartphones priced above around Rs 23,000 should be 5G-enabled.

This, though, may not be enough to push the smartphone market back into growth phase. Last month, experts told Mint that a number of factors such as the global supply chain crisis, lockdowns due to a fresh wave of the covid-19 pandemic in China, lack of consumer demand, stagnation in innovation, and rising inflation and supply costs leading to higher consumer prices have all contributed to this overall market slowdown.

IDC data for Q1 2022 stated that Xiaomi and Oppo were the two biggest losers in terms of shipments between January and March. Xiaomi, the largest smartphone OEM in India by volume, saw its shipments decline by 18.2%, while Oppo, in fifth place, saw a 24.9% decline. The two were the biggest single-brand losers during this quarter.

Singh added that the forecast for the rest of the year also remains bleak. “Due to rising inflation and lengthening of the smartphone refresh cycle, we expect 2Q22 also to remain muted. Smartphone supplies would gradually return to normal, resulting in a slower 1H22 compared to 72 million shipments in 1H21,” he said.

The slowdown in shipments has also been compounded by Indians using their existing smartphones for much longer than before, since they no longer feel compelled to upgrade their devices. Tarun Pathak, research director at Counterpoint India told Mint on May 5 that while the average upgrade cycle for an Indian smartphone user is 27 months right now, the same may increase by another two months by the end of 2022.

In 2015, the upgrade cycle was about six months.

The Indian refurbished smartphone market is also making the most of this opportunity, boosted by a rise of organized sellers in a traditionally unorganized sector. Data from market research firm Redseer stated that the Indian refurbished smartphone market, which is approximately worth $6 billion as of now, could grow to $10 billion by March 2026. According to Siddharth Surana, engagement manager at Redseer, factors such as affordability and increasing awareness due to promotions offered by organized refurbished phone sellers are fuelling this growth.