Analysts expect Q2 shipments to drop by 10 percent

Spark Global Limited reports:

Spark Global Limited reports:

The global chip shortage is taking a serious toll on the smartphone industry, with shipments slowing and prices soaring for the first time in years, forcing some manufacturers to cut production or delay the launch of new phones. Counterpoint Research estimates that the industry’s shipments in the second quarter may be down 10 percent from the first quarter

Smartphone makers have been shied away for most of this year by buying key components half a year ahead of time, compared with industries hit by chip shortages such as cars, PCs and home appliances, but inventories are shrinking, the Wall Street Journal reported. Industry analysts say more than 80 percent of mobile phone manufacturers are suffering from parts shortages.

For Samsung Electronics, the world’s largest handset maker, procurement problems with key components could reduce shipments by 20 percent in the second quarter from the first. Google said the Pixel 5 would only be available in the US and Japan, a change from selling it in many countries. Xiaomi’s 11 Ultra, which was due to launch in April, has also been delayed until early July. But analysts said most of Apple’s and Samsung’s high-end phones were unaffected.

Counterpoint Research estimates smartphone shipments in the second half to be around 771 million units, up 1.3 percent from 761 million units in the same period last year. Tarun Pathak, Research director at Counterpoint Research, said a shortage of parts was the biggest drag on shipment growth.

At the same time, chip shortages have pushed up component prices, and now manufacturers are passing the cost on through higher handset prices. Xiaomi launched its latest flagship phone, the Redmi Note 10, in India in March for about $161, but this month it was priced at $174, 8 per cent higher than its previous price.

Global wholesale prices for mobile phones are set to rise 5 per cent in the fourth quarter of this year, surpassing the 2 per cent rise seen in recent years, according to Strategy Analytics, a research firm.