Wednesday, 26 January, 2022

Smartphone industry to face headwinds from supply chain disruptions in 2022

NEW YORK: The global smartphone industry will continue to be hamstrung well into the next year by supply chain disruptions and component shortages, with Omicron variant further exacerbating the situation, according to the industry experts.

In wake of the lower-than-expected third-quarter performance and the continued logistical challenges, International Data Corporation has lowered its growth forecast for this year and next to 5.3 per cent and 3 per cent, respectively from 7.4 per cent and 3.4 per cent, report agencies.

There is no respite in the short term either for the industry and the situation is not expected to improve until mid-2022, Ramazan Yavuz, senior research manager at IDC for Middle East and Africa region, told The National.

The concerns that the latest Omicron variant may lead to further disruptions in manufacturing and logistics “scenarios that point to the last quarter of 2022 to speak of an end of supply chain disruptions are gaining in weight”, said Mr Yavuz.

Global sales or shipments of smartphones are expected to reach 1.35 billion by the end of this year and slightly more than 1.39 billion by the end of 2022, the Massachusetts-based researcher predicted.

“The smartphone industry will continue to navigate out of supply chain issues in the first half of next year. Industry wide component shortages will prevent market from hitting the double digit growth [in 2022],” Edward Moya, senior market analyst for the Americas at New York-based Oanda, told The National.

“The Omicron variant could wreak [further] havoc on supply chain disruptions in the first quarter … the fight against Covid isn’t over and inflationary pressures could lead to higher prices for the industry,” said Mr Moya.

Global smartphone sales to end-users declined 6.8 per cent in the July-September period, compared to the same period last year, according to Gartner.

Component shortages disrupted production schedules, leading to lower inventory and delayed product availability, which eventually impacted sales to end-users, the Connecticut-based technology research and consulting company said.

“In 2022, we do expect sales to improve but it is not really going to be in a double-digit – probably around 8 per cent … we may still be slightly behind to achieve that 2019 level [pre-Covid levels],” Anshul Gupta, senior director at Gartner, told The National.

Mr Gupta said although the Covid-induced disruptions have started to really normalise on both fronts – chip-related shortages and supply constraints – but the situation is far from resolved.

“We expect the situation with regard to some of the key components especially the chip sets will likely continue until the second quarter of next year,” he added.