"(For the first quarter of this year in the global smartphone market) shipments were inflated beyond projections based on actual consumer demand."
Market research firms show slightly different figures for the smartphone market, but responses say it is unusual for conditions to be this hard to read. Market research firm IDC released first-quarter findings on the 15th (local time) and noted the real-world difficulties.
Looking at first-quarter smartphone shipments that market research firms released this year, IDC tallied a 4.1% year-over-year decline, and Counterpoint Research recorded a 6% decline. But Omdia announced on the 10th that first-quarter global smartphone shipments rose 1% from the first quarter of last year.
However, Omdia also said that the "growth (in first-quarter global smartphone shipments year over year) is not fully reflecting the impact of expense increases on the supply side, as shipments were temporarily supported by vendors in distribution channels pre-purchasing inventory."
Typically, when market research firms tabulate the smartphone market, they use two yardsticks: shipments and sales. Shipments refer to the number of smartphones manufacturers deliver to sellers, and sales mean the number actually sold to consumers. Because it is hard to precisely capture the number sold to consumers at general retail stages such as dealerships, the industry often uses shipments—which can be counted accurately—as a market research indicator.
The fact that market research firms analyzed the same period yet released different market conditions is not unrelated to the surge in memory semiconductors. Results differed depending on how they handled volumes from contract manufacturers (OEMs) that pulled forward shipments ahead of expected component price hikes. Figures changed based on whether those shipments were included in the first quarter. In other words, manufacturers' inventory-building strategies in response to soaring memory prices overlapped, amplifying market swings. According to market research firm Counterpoint Research, first-quarter prices for mobile DRAM and NAND flash rose more than 50% and 90%, respectively, from the previous quarter.
Given this situation, even the first-quarter No. 1 in the smartphone market differs among market research firms. IDC and Omdia said the top corporations in the first quarter were Samsung Electronics, but Counterpoint Research picked Apple as No. 1.
IDC announced that Samsung Electronics took the top spot in the global smartphone market in the first quarter with a 21.7% share (by shipments). Omdia also said Samsung ranked No. 1 with a 22% share in the first quarter. However, Counterpoint Research's results differ. Counterpoint Research said Apple ranked No. 1 with a 21% share (by shipments) in the first quarter.
Specifically, Samsung Electronics' first-quarter smartphone shipments, by IDC's tally, grew 3.6% year over year, while by Counterpoint Research's tally they fell 6%. During the same period, Apple's smartphone shipments grew 3.3% by IDC's count and 5% by Counterpoint Research's count.
Even so, market research firms agree that this year's smartphone market will not be easy. In particular, while Apple and Samsung, which focus on premium smartphones, held their ground in the market, findings also agree that Chinese companies have already had a tough time since the first quarter.
IDC and Counterpoint estimated that Xiaomi's first-quarter smartphone shipments fell 19% year over year, the steepest drop among the top five companies. Xiaomi relies heavily on the price-sensitive budget smartphone market, making it highly vulnerable to rising memory prices. IDC projected that Oppo's first-quarter shipments fell nearly 10% year over year and Vivo's nearly 7%. Counterpoint Research tallied Oppo's decline over the same period at 4% and Vivo's at 2%.
Shilpi Jain, senior analyst at Counterpoint, said, "As memory companies prioritize AI data centers over consumer electronics, OEMs' margins have narrowed, and they had no choice but to pass the increased bill of materials (BOM) expense on to consumers," adding, "Amid persistent supply shortages, higher energy prices, rising logistics expense, and economic uncertainty stemming from tensions in the Middle East have dampened sentiment for new purchases, leading to continued shipment declines."
Anthony Scarsella, research director at IDC, said, "A 4% year-over-year decline in worldwide smartphone shipments in the first quarter is only part of what's to come due to the spike in memory prices," adding, "Emerging markets, especially those focused on devices under $200, will see consumer choices become very limited due to rising memory component prices, and this will be a bigger challenge than the pandemic over the past five years."