Global smartphone market set to hit 10-year low in 2023, but Apple could leapfrog to top spot, according to research

The photo taken on Aug. 14, 2023 shows iPhones at an Apple store in Hangzhou, east China’s Zhejiang province. On the same day, data released by TechInsights showed that Apple’s iPhone sales in China surpassed the United States for the first time in the second quarter of 2023, becoming the largest single market for iPhone shipments.

Cost photo | Nurfoto | Getty Images

Global smartphone shipments this year are on track to be the worst in a decade, Counterpoint Research said in a report Thursday, as the market is being dragged down by the United States and China.

However, Apple it could become the biggest smartphone player this year by shipments, as its high-end iPhone sales remain resilient, the report added.

By measuring expected demand, shipments do not equal sales and represent the number of devices that smartphone vendors ship to resellers.

Counterpoint Research said it expects smartphone shipments in 2023 to decline 6% year-over-year to 1.15 billion devices.

“Asia is a major headwind to positive growth as headwinds halt the economic turnaround expected for China earlier this year and the broader region experiences a growing decline in emerging markets,” he said Counterpoint in your report.

China’s economy has shaken this year and fallen short of expectations of a quick recovery, while consumers remain cautious on spending.

Chinese smartphone purchases, which at their peak averaged 450 million annually, have shrunk to 270 million annually, contributing as a major cause of declining global smartphone sales, said Karn Chauhan, analyst senior of Counterpoint Research at CNBC by email.

North America continues to dampen the global recovery, with a “disappointing” first half of the year setting the region up for double-digit full-year declines, Counterpoint’s report said.

“Despite the strength of the job market and falling inflation, consumers are reluctant to upgrade their devices, pushing replacement rates in the US and around the world to record highs,” the research firm said.

‘Apple in a good position’

The premium end of the market with more expensive devices has remained fairly resilient, despite a decline in overall smartphone shipments.

Apple is preparing to launch its next flagship smartphone, the iPhone 15, in September. That could give the company a strong showing later this year, Counterpoint said.

“But we’re looking at Q4 (Q4) with interest because the iPhone 15 launch is a window for carriers to snag high-value customers. And with that large iPhone 12 installed base up for grabs, promotions will be aggressive, leaving Apple is in a good position,” Jeff Fieldhack, director of research for North America at Counterpoint Research, said in a press release.

Chauhan said the analyst firm expects Apple’s shipments to increase “marginally” year-over-year given demand in markets like China and other Asian countries where there is a “growing premiumization trend,” meaning that people are willing to pay a higher price for phones.

Apple’s range of iPhones helps Apple play in the premium segment of the smartphone market.

Counterpoint Research said the US company could take the top spot globally in terms of annual shipments for the first time this year. Samsung was the top player by market share in the second quarter of the year.

“This is the closest Apple has ever come to first place. We’re talking a spread that is literally a few days of sales,” Fieldhack said. “Assuming Apple doesn’t have production issues like last year, that’s really a problem at this point.”

Apple has been pushing into new markets, with India set to be a focal point for the company in 2023, as it looks to capitalize on local consumer appetite for premium devices. The US company opened its first physical stores in India this year, with CEO Tim Cook visiting the country.

Apple’s ability to grow in the market will also affect whether it becomes the number one smartphone maker this year, according to Chauhan.

“The reception of the iPhone 15 and growth in non-core iPhone markets will decide whether or not Apple surpasses Samsung on a full-year basis,” Chauhan told CNBC.

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