SEOUL – Global smartphone shipments have seen their worst quarterly drop on record in a clear sign of cooling consumer demand that signals more pain for manufacturing hubs such as South Korea and Vietnam.
Shipments declined 18.3 per cent in the December quarter compared with a year earlier to a little more than 300 million units, research and consultancy firm IDC said on Thursday.
For the year, shipments fell 11.3 per cent and marked the lowest total for a decade, it added.
“We have never seen shipments in the holiday quarter come in lower,” Ms Nabila Popal, research director at IDC, said in a press release.
Along with inflation and economic uncertainties, Covid-19 lockdowns in China were another factor that hurt the industry, including sales of Apple’s iPhones, she said.
“Heavy sales and promotions during the quarter helped deplete existing inventory rather than drive shipment growth.”
Turmoil in Apple’s main Chinese production base may have disrupted shipments in the quarter. Protests over Covid-19 restrictions and living conditions at the Zhengzhou complex, which makes the majority of the world’s iPhones, derailed production for weeks, culminating in violent protests in December.
Smartphones are among the largest exports for South Korea and a key source of income for Vietnam as Samsung Electronics operates factories in both countries.
Samsung last quarter reported its biggest profit fall in more than a decade, primarily led by a drop in demand for semiconductors. The company’s exposure to smartphone sales is amplified by its role as the leading provider of memory and displays for the industry.
Mobile gadget sales serve as a barometer of demand for chips.
South Korea’s smartphone shipments are likely to eke out just 0.7 per cent growth this year after falling 2.1 per cent last year, according to a Korea Development Bank forecast.
Chip exports from the country will probably contract 9.8 per cent in 2023 from a year earlier, it said, adding to earlier suggestions that a recovery in demand should not be expected until the tail end of the year. BLOOMBERG