After drop in India, smartphone shipments in China hit lowest in decade

Smartphone shipments in China dropped 13% year-on-year (YoY) to hit the lowest numbers seen in the world’s largest consumer electronics market in a decade. According to a report by market researcher International Data Corporation (IDC), China’s smartphone shipments dropped to 286 million units in calendar year 2022 — down from 329 million units in 2021. As per IDC, this marked the lowest smartphone shipments in China since 2013, or nearly a decade.

China’s slump in smartphone shipments comes amid a phase of prolonged smartphone shipment decline in India as well. According to data from market researcher Counterpoint published on January 27, smartphone shipments in India dropped 9% YoY to reach 152 million units, as lack of compelling features, limited budget 5G smartphones, lack of widespread 5G availability and increasing inflationary caution saw consumers move away from buying smartphones.

Inventories of smartphones in India, which typically were around three weeks prior to the outbreak of Covid-19, has since risen to nearly 10 weeks in the country, according to industry analysts.

In China, strict Covid-19 protocols led to a slowdown in the fast-paced smartphone market, and a further decline in the growth of the economy hit consumer interest even further, according to IDC and fellow market research Canalys’ reports.

The market remains similar to India’s lukewarm scenario, where smartphone brands are finding it difficult to market their latest devices. On Monday, Mint reported that 2023 could be a second consecutive year of decline, or a flat growth curve at best, for the country’s smartphone market. According to analysts from IDC and Counterpoint, consumer interest is likely to remain low, even taking into account a potential boost to the market that is expected from new, affordable 5G smartphones that the 2023 festive season may bring.

For now, though, affordable 5G smartphones remain slim in India. According to Counterpoint’s senior research analyst Prachir Singh, the average selling price (ASP) of a smartphone has gone up by over 17% in the past one year — up from ₹17,000 to ₹20,000 — as buyers have resorted to considering more expensive phones due to the lack of availability of cheaper alternatives in the highly value-sensitive market.

While this would typically be good news in terms of market revenue, the rising ASP has led to reducing shipments and rising inventories as buyers have started holding on to their phones for much longer. According to Navkendar Singh, associate vice-president at IDC, while the average smartphone refresh cycle in India was around six months in 2020, the same has risen to two years at the end of 2022 as users purchase more expensive devices.

Both China and India’s smartphone markets are in-line with the global trend in smartphone shipments. According to an IDC report published on January 26, global smartphone shipments fell over 11% to 1.2 billion units in 2022 — the lowest recorded since 2013.