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Following back-to-back quarters of growth, International Data Corporation (IDC) has raised its near-term outlook for the global smartphone market. According to the IDC Worldwide Quarterly Mobile Phone Tracker, shipments of smartphones are forecast to reach 1.38 billion units in 2021, an increase of 7.7% over 2020. This trend is expected to continue into 2022, when year-over-year growth will be 3.8% with shipments totaling 1.43 billion.
Markets worldwide continue to migrate toward 5G, where networks are deployed. Within emerging markets, there is strong demand for mid-range and low-end 4G phones following last year's pandemic slowdown. Looking toward the later years in the forecast, IDC expects low single-digit growth to continue through 2025 with a five-year compound annual growth rate (CAGR) of 3.7%. The global semiconductor shortage remains a concern for many industries and the smartphone market has not been excluded from this. However, the impact has been far less than in other markets like automotive, PC, and various consumer tech categories.
"Smartphones are seeing competition for consumer spending from adjacent markets like PCs, tablets, TVs, and smart home devices, yet that hasn't slowed the market's path to recovery," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers. "The smartphone market returned to growth during the holiday quarter last year and since then we've only seen production from top suppliers ramp up. There continues to be a strong supply-side push toward 5G, and price points continue to drop as a result. IDC expects average selling prices (ASPs) for 5G Android devices to drop 12% year over year in 2021 to $456 and then below $400 in 2022. Apple will continue to feel price pressure."
With 5G shipments expected to grow nearly 130% in 2021, almost all regions outside of China will see triple-digit growth by the end of this year. However, in terms of market share, China will lead the way with nearly 50% share of 5G shipments in 2021 while the US will follow with a 16% share. Other significant markets such as Western Europe and Asia/Pacific (excluding China and Japan) will combine for a 23.1% share of the worldwide 5G market by the end of 2021.
"Although the 7.7% growth will feel like an impressive market turnaround, we must keep in mind that we are rebounding from one of the most challenging years on record," said Anthony Scarsella, research manager with IDC's Worldwide Mobile Device Trackers. "2021 will represent the largest year-over-year growth the market has witnessed since 2015, as the shift towards 5G across all price tiers continues to accelerate. The 5G shift will also deliver peak smartphone ASPs in 2021 ($376, up 9.7% year over year) when compared to the remainder of the forecast period as costly 5G devices continue to replace LTE devices, which are also starting to drop in price, down 27% in 2021."