According to a new report from Maeil Business News in South Korea, Samsung, the world’s leading smartphone maker, will reduce manufacturing by 30 million units in 2022. The news comes as the turmoil in Ukraine continues to stymie sales. In other words, things are not looking good for the smartphone market.
In fact, long before the coronavirus pandemic arrived, the industry was on the verge of a collapse. The glorious days of market expansions and bi-annual upgrades seem to be over. And two years of supply chain bottlenecks and financial constraints have only added to the problem.
It comes as a no surprise that companies are cutting back on production for all of these reasons.
Samsung had halted sales in Russia in March, following the footsteps of fellow tech titans Apple and Microsoft. Apple has been suffering as well.
Declining Sales of Affordable Smartphones
According to the report, Samsung lowers production targets across its low-to-mid-range and flagship devices. Samsung had planned to produce 310 million smartphones in 2022 but opted to reduce that number to 280 million.
It had set a goal of producing 300 million units by 2022, but it has yet to achieve this goal since 2017. On the other hand, the global economic condition has dampened demand, and the company must respond.
Inflation is at an all-time high in several significant economies around the world. It caused consumers to cut back on purchases they don’t require. According to market analysts, this will be a big factor in lowering sales of low-cost devices this year.
Woes of Apple
Recent reports from Bloomberg noted that Apple is also scaling back plans to make additional 20 million iPhones in 2022. Instead, starting in 2021, its numbers are expected to remain flat.
Those figures come after several quarters of iPhone sales that defied many of the industry’s macro trends, but the business may be settling back down, even with the iPhone 14 on the way.
According to Strategy Analytics, overall smartphone sales are expected to decline by as much as 2% in 2022, and TrendForce’s full-year production prediction has been reduced twice in recent weeks.
Apple has already warned that supply issues may reduce sales by 4 billion USD to 8 billion USD in the current quarter, owing to Covid-19 lockdowns causing havoc on Chinese production lines. And the entire tech industry is prepared for a slowdown in consumer spending as the cost of everyday necessities rises due to rising gasoline and materials prices.
The Smartphone Market
The smartphone market has had a terrible start to the year, with shipments down 11% in the first quarter, the lowest level since the pandemic started two years ago. This month, Xiaomi Corp., the world’s third-largest smartphone maker after Apple and Samsung Electronics Co., reported its first-ever quarterly revenue decline.
Thanks to a perfect storm of industrial and global circumstances, we’ve arrived at this point. The larger manufacturers shouldn’t be concerned; they’ll almost definitely emerge unhurt from the quagmire.
However, there are lingering concerns about the industry’s future. The biggest question is whether this is a slowdown after a decade of record-breaking smartphone sales or whether new technology like foldable screens will be enough to ignite a comeback to the mobile golden age.