“The worst performance in a decade” – this is how analysts from Canalys comment on smartphone shipments at the end of 2022. According to their preliminary data, we are talking about a 17% drop in the last quarter and a total of less than 1.2 billion devices that reached the market throughout the year year.
The macroeconomic environment is proving to be extremely difficult for their producers, with Canalys stating that traders are being extremely careful with their orders and this is leading to reduced supplies. “While demand in the low-end and mid-end declined rapidly in previous quarters, that in the high-end began to show weakness in the fourth quarter. The market’s performance contrasts sharply with that in the same period of 2021, when we saw demand rise and supply decrease problems,” commented analyst Runar Björhovde.
According to the authors of the analysis, a rapid and large-scale improvement cannot be expected in 2023: “Although inflationary pressures gradually weaken, the effects of rising interest rates, the economic slowdown and an increasingly sluggish labor market will reduce the potential in this area. This will greatly impact saturated markets dominated by mid-range and high-end devices such as Western Europe and North America.”
In practice, Canalys’ observations show one thing – in a situation of economic uncertainty, people are reluctant to invest in devices that are not immediately necessary for work or for basic life activities and that are not qualitatively better than those they have and at the moment.
It is therefore no surprise that Apple became the top manufacturer in Q4 with a 25% market share – the company’s devices have an audience that is extremely loyal, and in markets like the US, telecoms significantly subsidize the otherwise rather high price. Samsung and Xiaomi make up the top three, but both companies’ devices have seen a serious drop in demand.
Relatively positive are only the expectations for Southeast Asia due to the recovery of the economy and tourist activity in China.
Networks are no better
Swedish telecom equipment maker Ericsson failed to meet its revenue targets in the final quarter of 2022, The Register reports. The reason – operators are in no hurry to make large investments in 5G because of the uncertainty of what comes next for the economy.
The result – 34% less profit before taxes on a year-over-year basis and almost 25% less than the expected about $1 billion for the quarter. Executive director Bjorje Ekholm admits that in the short term the situation is “uncertain”.
Therefore, the company expects the network operators to “continue to use their assets” in view of the unfavorable macroeconomic factors. As Telecoms.com notes, this means that, according to Ericsson, telcos will hold back on investing in new equipment and rely on what they have already purchased for at least the foreseeable future – at least in the first half of the year.
The manufacturer’s report indicated good growth in India, which, however, could not compensate for limited demand in markets such as North America. Arguably, the problems at the end devices are transferred to the network equipment – 5G is yet to reveal its great potential, but its current implementations are not enough to make both consumers and telcos make expensive upgrades in the current economic situation.
While the consumer 5G segment is currently suffering from the macroeconomic situation, Ericsson is turning its sights to business users for specific 5G network solutions. Ekholm identifies this part of the business as a “big driver for long-term growth” after 2024, along with licensing agreements in new areas such as IoT.
