MASSACHUSETTS • Shipments of smartphone worldwide are expected to fall by 11.9 per cent this year - their biggest annual drop - indicating things are going to get worse for the industry before they get better.

In its latest market forecast, research firm IDC anticipates shipments of 1.2 billion this year, down from just under 1.4 billion last year.

The annual forecast follows a record 11.7 per cent year-on-year drop in the three months that ended in March. The latest projections are a dramatic revision of an annual forecast by IDC in February, after the virus hit, that predicted a 2.3 per cent decline.

Pinning the blame on the coronavirus outbreak and its effects on both supply and demand, the forecast points to an upswing in sales and shipments next year, suggesting that some purchases will be delayed rather than entirely forgone.

The proliferation of fifth-generation wireless services will also help rekindle consumer interest, the researchers said.

"What started as a supply-side crisis has evolved into a global demand-side problem," analyst Sangeetika Srivastava for IDC's Worldwide Mobile Device Trackers said in a statement. "Nationwide lockdowns and rising unemployment have reduced consumer confidence and reprioritised spending towards essential goods, directly impacting the uptake of smartphones in the short term."

China's domestic market will see only a single-digit decline, said IDC, pointing to the country's recovery from the outbreak. Europe, however, has suffered a heavier toll and is expected to experience deeper falls in spending and demand.

"On the brighter side, 5G is expected to be a catalyst throughout the forecast period, which will play a vital role in worldwide smartphone market recovery in 2021," said Ms Srivastava.

BLOOMBERG