Lasting Scarring Effects Expected as Mobile Device Markets Face a Challenging Path Back to Recovery and 5G Saturation

27 Apr 2023

It is no secret that the mobile devices market has had a torrid past three years as shipments have been buffeted in all directions. The global pandemic, geopolitical pressures, supply chain issues, and macroeconomic headwinds have conspired to hinder the sector's collaboration, market development, and innovation. This extremely challenging environment has dramatically affected both demand and supply chains. It has led to subsequent inflationary pressures, leading to a worsening global cost of living crisis suppressing growth and confidence in the consumer sector. In tandem, mobile device industry stakeholders have become more cautious triggering market uncertainties.

Operating under such a backdrop, the development of mobile device ecosystems and vendor landscapes have been impacted severely. Many of these market pressures persisted throughout 2022 and now into 2023, borne chiefly by the smartphone market. According to global technology intelligence firm ABI Research, worldwide smartphone shipments in 2022 declined 9.6% Year-over-Year (YoY) to reach 1.207 billion units but anticipates that the market will see a marginal 2.4% increase in 2023 to 1.24 billion. “Despite the economic climate and geopolitical volatility conspiring to outweigh any growth potential in 2022, smartphone demand is expected to be counterbalanced in 2023 by 5G device affordability as a primary growth driver,” commented David McQueen, Research Director at ABI Research. “Smartphone sales are also expected to be buoyed throughout the year by large fledgling markets continuing their migration to 5G, notably India, and as smartphones replace feature phones.”

While there are signs that softened demand in some markets, such as China, will rebound through 2023, the premium and high-end smartphone market is expected to remain resilient as it is relatively unaffected by economic fluctuations. “It will be the mobile device industry’s ability to strike a positive balance between the impact of disrupters against the gradual return of supply chains, consumer sentiment, market confidence, and strength of demand that will determine the speed of recovery and instigate a longer-term sustainable path,” added McQueen.

With these market vectors in mind, ABI Research expects smartphone shipments to grow to 1.33 billion by 2028 at a CAGR of 1.5%. As a vital part of this overall growth, 5G smartphones will increase from 825 million in 2023 to 1.244 billion by 2028, accounting for 67% and 93% of the total, respectively, indicating that global 5G penetration still has some way to go. Conversely, spikes in demand for items like tablets, notebooks, and Chromebooks caused during the pandemic and by changes in consumer behavior have been tempered after demand contracted in 2022, and shipments are expected to fall over the coming years.

While market confidence is under such pressure, it is proving difficult to predict the speed at which future demand will recover in the short- and mid-term across regions, as well as for the many mobile device product types. Moreover, there is still much to be done to fully expose the value of the 5G ecosystem and realize its full potential, which the introduction of 5G-Advanced by 2024 will bolster. “Despite the industry’s current woes still looming large, the mobile devices market could potentially be buoyed over the next 18 months by additional technology migration and consumers' eagerness to embrace new innovative mobile experiences and services, enhanced broadband speeds, leading-edge form factors, including foldable devices, and greater processing power. In combination, these can drive the industry from device-led to a more experience-centric ecosystem,” concludes McQueen.

These findings are from ABI Research’s 5G Mobile Devices, Features, and Technologies: Vendors, Trends, and Forecasts market data report. This report is part of the company’s 5G Devices, Smartphones & Wearables research service, which includes research, data, and ABI Insights. Market Data spreadsheets comprise deep data, market share analysis, and highly segmented, service-specific forecasts to provide detailed insight into where opportunities lie.

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