Smartphone market to rebound in 2021 thanks to 5G push and consumer demand

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Global shipments of smartphones will rise by 5.5% this year following last year’s decline, says IDC.

Image: Apple

A continued recovery in consumer demand and a push of 5G devices should help the smartphone market bounce back in 2021, research firm IDC said on Wednesday.

SEE: Research: How 5G will transform business (TechRepublic Premium)  

In a new advisory, IDC forecast growth in smartphone shipments of 5.5% for 2021, a healthy jump from the 5.9% decline seen last year. The first quarter of the year will be especially strong with shipments expected to surge by almost 14% from the same quarter in 2020.

IDC attributed its rosy outlook to two factors.

First, strong demand continues for smartphones, especially among online buyers adapting to the coronavirus pandemic. Unlike much of last year, most players in the supply chain, including manufacturers, retailers and consumers, are better prepared to handle further COVID-19-related lockdowns.

“IDC has seen accelerated growth in online channels, climbing to 27% share in 2020 from just 20% the prior year, as channels adapt to the pandemic lifestyle,” Nabila Popal, research director with IDC’s Worldwide Mobile Device Trackers, said in a press release. “Ramp ups in production and improved channel planning combined with strong pent-up demand are all pointing to healthy growth in the months ahead.”

China and the U.S., which are the two biggest smartphone markets in the world, are estimated to grow by 5% and 3.5%, respectively, in 2021. Though China was hit by several city-level lockdowns this past January, the country’s consumer confidence remains strong. Both markets are expected to see a jump in shipments this year due to 5G development and the continued success of the latest iPhones.

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Image: IDC

Second, 5G remains a driving factor for the smartphone industry around the globe, boosted by the heavy demand for Apple’s newest phones. 5G phone shipments are forecast to snag more than 40% of overall smartphone shipments this year, rising to 69% in 2025. At the same time, increased competition among 5G Android phone vendors, especially those in China, will push down the average selling price of such phones to $404 by the end of 2025.

Strong smartphone demand in the last quarter of 2020 pushed manufacturers to increase production, according to Sangeetika Srivastava, senior analyst with Worldwide Mobile Device Trackers. Though this might create temporary challenges, the analyst believes that manufacturers will be able to handle this ramp up. Still, this increase may put pressure on smaller vendors, especially as the major players are given higher priority along the supply chain.

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