The ongoing component “famine” has finally hit the global smartphone industry as shipments fell by 8 per cent in the third quarter of 2021.
According to research firm Canalys, the smartphone market is attempting to make the best out of the component shortage rocking the IT landscape, which it has largely avoided until now.
However, now, Canalys principal analyst Ben Stanton claims the “chipset famine has truly arrived”.
“On the supply side, chipset manufacturers are increasing prices to disincentivise over-ordering, in an attempt to close the gap between demand and supply,” he said.
“But despite this, shortages will not ease until well into 2022. As a result of this, as well as high costs of global freight, smartphone brands have reluctantly pushed up device retail pricing.”
In addition, vendors are implementing last-minute changes to device specification and order quantity, which Stanton claims is a “critical” priority for them but is also resulting in confusion and inefficiency with distributors and retailers.
“Many channels are nervous heading into important sales holidays, such as Singles’ Day in China and Black Friday in the west,” he continued.
“Channel inventories of smartphones are already running low and as more customers start to anticipate these sales cycles, the impending wave of demand will be impossible to fulfill.
“Customers should expect smartphone discounting this year to be less aggressive. But to avoid customer disappointment, smartphone brands which are constrained on margin should look to bundle other devices, such as wearables and IoT, to create good incentives for customers.”
As a point of comparison, this quarter's decline comes after the 9 per cent drop in shipments seen a quarter prior.
The top smartphone vendors for the quarter largely continued the previous quarter’s trends, according to the firm, with Samsung out ahead in first place again with 23 per cent market share.
Apple regained second place from Xiaomi since the second quarter, with the two vendors making up 15 per cent and 14 per cent market share, respectively.
In fourth and fifth was vivo and OPPO, which rounded out the top five vendors for the quarter with 10 per cent market share each.