The uncertainty in the spread of the Coronavirus outbreak is now starting to affect the worldwide smartphone shipment recovery for the year 2020, with IDC predicting a 2.3% decline, down to 1.3 billion shipments. The first half of 2020 will see a decline of 10.6% YoY, with the market predicted to only make up ground in the second half with accelerated 5G efforts.
China is struggling to recover from its demand shock that was created by the outbreak. IDC is calculating a multi-quarter growth for the industry in China as Chinese workers gradually return to factories amidst persisting transportation challenges. The Chinese Governments efforts to provide stimuli and subsidies will help improve the situation during the later quarters of the year, but only actual smartphone shipments will tell us how well the market is recovering.
Another problem for major smartphone manufacturers is that February and March is the time for some flagship models, which has already been affected by the outbreak. Along with this, a lot of final pre-production tests and product debugging has also been delayed, creating potential problems for the handsets that are slated for release in the second half of the year.
Commenting on the effects of the Coronavirus outbreak, Sangeetika Srivastava, senior research analyst with IDC’s Worldwide Mobile Device Trackers said:
COVID-19 became yet another reason to extend the current trend of smartphone market contraction, dampening growth in the first half of the year. While China, the largest smartphone market, will take the biggest hit, other major geographies will feel the hit from supply chain disruptions. Component shortages, factory shutdowns, quarantine mandates, logistics, and travel restrictions will create hindrances for smartphone vendors to produce handsets and roll out new devices. The overall scenario is expected to stabilize from the third quarter of the year as the COVID-19 situation hopefully improves and 5G plans pick up the pace globally.
Commenting on the effects of the outbreak for the Chinese economy, Will Wong, research manager with IDC’s Asia/Pacific Client Devices Group said:
For the epicentre, China, we forecast the domestic market to drop by nearly 40% year over year for first quarter and even with a potential March recovery it will still be difficult to reach last year’s levels. Buyers will purchase from online channels, which will account for a significantly increased share of phones sold in the first half of 2020 and may represent a permanent shift in buying behaviours.