The downturn in the cell phone market is due to several factors that are also seen in other segments of the technology industry. Inflation is the main obstacle that caused a significant downturn in the sector, and according to forecasts released in an IDC report on Wednesday (31), commercial performance should not improve anytime soon.
Analysts report that “weak demand” for new products is holding back the recovery of the cell phone market, which recorded one of the worst sales rates in the last decade in 2022. As projected, the segment must suffer a 3.2% shrinkage in mobile phone shipments in 2023, but to grow again in 2024.
Previous forecasts indicated that the cell phone market would shrink by 1.1% in 2023. Now, analysts adopt a more pessimistic view based on the unfavorable scenario of the global economy. Despite the difficulties expected for this year, IDC believes that the sector will see a recovery in 2024 with 6% growth compared to 2023.
Nabila Popal, director of research, says that cell phone manufacturers are maintaining a more cautious strategy in 2023, especially after a period of low demand that generated excess inventory in 2022.
“Channel inventory remains high in many regions, and while things have improved, vendor confidence is still low,” comments Ryan Reith, vice president of consumer device tracking at IDC.
Reith notes that there is a trend of foldable cell phone launches, but inflation and high prices make it difficult for them to expand in the market. With this, it is possible that some companies start to offer a varied range of products with competitive prices.
In a previous analysis, IDC Europe reported a shrinkage of almost 7% in the national cell phone market in 2022. Around 40.6 million smartphones were sold last year, marking a reduction of 1.74% in revenue. At the time, experts pointed out that the results should be “near or lower” in the country in 2023.