Its latest mobile phone market forecast indicates a total of 1.64 billion mobile phones will ship during the year. Smartphones are expected to reach 1.39 billion units in 2022, achieving year-on-year growth of 4.2%.
CCS Insight expects the market to see a slight recovery in 2022 following a difficult 2021, when a shortage of components severely affected manufacturers’ ability to meet demand. “Although supply conditions may remain volatile during 2022, improvements are expected throughout the year in time for the holiday fourth quarter. However, manufacturers now face weak consumer demand thanks to a difficult economic environment and potential challenges from the wave of Chinese lockdowns”, notes James Manning Smith, senior analyst.
“A worsening economic outlook for 2022 is expected to produce a third year of weak sales since 2020, reducing demand for mobile phones in both advanced and developing markets,” he adds.
“Although we forecast some growth in mobile phone sales in the year ahead, the global market faces a period of higher inflation, limited economic growth and changing consumer buying behaviours, which are all set to limit mobile phone upgrades and adoption by new users”, Manning Smith comments.
“Adding to the woes of the mobile phone market is the expectation that this year people in Western markets will prioritize holidays, dining out and other in-person experiences missed over the past two years, while holding onto mobile phones for longer”. Mobile phone manufacturers have a difficult choice on their hands: protect profit margins or reduce prices to stimulate demand.
The Russian invasion of Ukraine has further complicated a difficult economic year, with the impact on mobile phone sales expected to be felt worldwide. “Mobile phone sales are expected to decline by 15% in Eastern Europe during 2022, and this will have a knock-on effect of limiting recovery in Western Europe” states Manning Smith.
The war has led to energy prices increasing worldwide, alongside higher food costs that risk raising poverty levels in developing economies. CCS Insight believes the resulting economic turmoil will weaken the appetite for replacing mobile phones, as well as limiting further adoption in less affluent markets.
“2022 will be a tough year, but there’s hope ahead if the global economy strengthens while navigating the current troubles” Manning Smith notes. “We project a 3.8% growth in overall demand for mobile phones in 2023, fuelled by 6.4% growth in smartphones during the year”.
Mobile phone shipments are forecast to exceed pre-pandemic levels by 2025, driven by growth in India and other emerging markets in Asia, Africa and the Middle East, alongside a recovery in Eastern Europe. “For some people, the aspiration of buying a mobile phone for the first time has been delayed but not lost, and we hope to see this reflected in a further wave of adoption over the next five years” states Manning Smith.
Although overall demand in 2022 is expected to be muted, 5G mobile phone sales continue to rise. “In 2022, we forecast 709 million 5G mobile phones to ship, representing 43% of the market, aided by more affordable 5G smartphones launching toward the end of the year”, concludes Manning Smith. “By 2026, 75% of the 1.88 billion mobile phones sold in the year are forecast to include 5G, totalling 1.41 billion”.