The smartphone industry is poised for a healthy recovery this year with growth rates not seen since 2015, according to IDC. In a note released Wednesday, the research firm said that it raised its global smartphone forecast for 2021 and is now eyeing total shipments of 1.38 billion units, a gain of 7.7% over 2020. IDC’s prior estimate called for growth of 5.5% this year.
IDC attributed the positive trend to sales of 5G phones in regions where supported networks have sprouted. But demand has also been strong for midrange and low-end 4G phones in emerging markets, especially in light of last year’s economic slowdown due to the coronavirus pandemic.
A growth rate of 7.7% sounds impressive, but it does come on the heels of one of the most “challenging years on record,” Anthony Scarsella, research manager with IDC’s Worldwide Mobile Device Trackers, said in a press release. In 2020, smartphone shipments fell by 6.7% from the previous year. However, 2021 will mark the first first year of growth after four years of declines. The last year the industry witnessed any growth in shipments was in 2016 with a gain of just 2.2%.
The semiconductor shortage remains a problem for a variety of industries, including the smartphone sector. But the shortage’s impact to smartphone vendors has been less than in other markets such as automotive, computers and certain types of consumer technology.
“Smartphones are seeing competition for consumer spending from adjacent markets like PCs, tablets, TVs, and smart home devices, yet that hasn’t slowed the market’s path to recovery,” Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers, said in a press release. “The smartphone market returned to growth during the holiday quarter last year and since then we’ve only seen production from top suppliers ramp up.”
Shipments of 5G phones are expected to jump by nearly 130% this year. Almost all regions except for China will enjoy triple-digit growth by the end of 2021, according to IDC. But China will capture the biggest market share with almost 50% of all shipments this year, followed by the U.S. with 16%. Western Europe and Asia/Pacific (excluding China and Japan) will take a combined 23.1% market share of the 5G market by year’s end, IDC said.
As the industry continues to push 5G, prices on these latest phone flavors have been dropping. Reith said he expects average selling prices on 5G Android devices to fall by 12% this year to $456 and to below $400 next year. Apple will also continue to feel price pressure on the iPhone.
Gazing into its crystal ball, IDC expects low single-digit growth for the smartphone industry to continue for the next several years with a five-year compound annual growth rate of 3.7%.
Editor’s note: This article has been updated with additional information.