While global growth in the smartphone market is expected to continue for the remainder of this year and into next, potential barriers to growth remain. Canalys expects component supply to emerge as a new bottleneck for the smartphone industry as vaccine rollouts continue around the world.
A short supply of semiconductors over the past year has impacted other areas of the IT device industry, with the PC market one of the segments affected, even if the supply issues have been slated to clear up by the middle of this year.
To date, the smartphone market has remained somewhat unaffected by the semiconductor shortage, but that doesn’t mean it will escape the fallout of component supply bottlenecks and the throttling effect on growth such bottlenecks can cause, according to Stanton.
“Back orders are building,” Stanton said. “The industry is fighting for semiconductors, and every brand will feel the pinch.”
Canalys expects vendors to first turn to regional prioritisation as a way to manage potential supply shortfalls, focusing the flow of units into lucrative developed markets such as China, the United States and Western Europe at the expense of Latin America and Africa.
Even in these better-served regions, however, supplies are expected to still be constrained, with vendors anticipated to turn to channel prioritisation, pushing a greater allocation of units into fast-activation channels, such as telco carriers, and fewer into distribution and the open market.
Although this may hit distribution channels, one positive side-effect is for challenger smartphone brands. In such a climate, doors may open for challengers to gain share in key open market channels if the incumbents are unable to fulfil the sub-segments they are usually able to permeate without any trouble.
“The other angle to this is pricing,” said Nicole Peng, vice president of mobility at Canalys. “As key components, such as chipsets and memory, increase in price, smartphone vendors must decide whether to absorb that cost or pass it on to consumers.”
In April, fellow industry analyst firm IDC noted that global smartphones were on a steep upward curve again as consumer appetites returned to “healthy” levels amid the coronavirus vaccine rollout.
According to IDC’s data, smartphone vendors shipped nearly 346 million devices during the first quarter of 2021, a rise of 25.5 per cent year-on-year. Asia Pacific – excluding China and Japan – saw some of the strongest global growth, experiencing 28 per cent year-over-year growth, respectively.
IDC’s figures roughly matched up with those from Canalys, which calculated 347 million units, up 27 per cent, year-on-year, shipped in the first quarter.