Analysts say smartphone sales may drop in Q2

China’s smartphone market could decline in the second quarter as the country experiences a resurgence of covid cases, analysts say. However, analysts say Apple could be priced quite high as it continues to attract users in the high-end segment of the market.

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China’s recent surge in Covid cases threatens to hit handset sales in the world’s biggest smartphone market if it’s not contained, but the US giant Apple Analysts told CNBC.

On Wednesday, China reported more than 20,000 Covid-19 infections with the majority in the major city of Shanghai. The authorities there imposed strict lockdown measures in the city, threatening logistics and spending and consuming.

Neil Mawston, managing director at Strategy Analytics, forecasts a 20% year-over-year decline in smartphone shipments.

Neil Shah, partner at Counterpoint Research, said that CNBC’s smartphone sales in April and May are likely to drop 12% to 13% year-over-year.

Sales may increase in June due to Big sale shopping event and when Covid subsides. That could lead to a 3% to 4% drop in smartphone sales in China, Shah said. However, if the Covid situation continues, the market could drop to as low as 12% year-on-year, he added.

The Android segment in China remains a brutal market, with half a dozen brands (like Xiaomi) vying on price for a dwindling piece of the Android pie.

Neil Mawston

Managing Director, Strategy Analytics

Will Wong, research director at IDC, predicts that smartphone shipments could drop by around 3.4% year-on-year in Q2.

“The impact is expected to come mainly from soft consumer demand and sentiment due to the Covid outbreak and slowing economic dynamics,” Wong told CNBC. “Supply disruption will be a factor of less concern as the bubble mill and the government’s experience in containing the outbreak could help mitigate the impact.”

In March, Apple’s iPhone assembler Foxconn a short time had to shut down one of its main factories in Shenzhen due to Covid. During the Covid outbreak, China tried to keep factories running as much as possible to minimize disruption.

Vulnerable Android players

Mr. Wong of IDC said that China’s smartphone shipments dropped in the second quarter mainly due to the weakening momentum of the Android market.

Android is Google’s smartphone operating system. Chinese brands run a modified version of them. Android phone suppliers include Chinese smartphone manufacturers such as XiaomiOppo and Vivo.

The Android segment in China remains a brutal market, with over half a dozen brands (like Xiaomi) vying on price for a dwindling piece of the Android pie, said Mawston of Strategy Analytics. .

Still, Apple can sell pretty well. Shah said that Apple could see a 4% to 5% drop in shipments in the second quarter, but that’s partly seasonal as the effect of brand-new product releases fades. Apple released its latest products late last year.

Read more about China from CNBC Pro

According to both Shah and Wong, Apple continues to capitalize on Huawei’s decline in the premium segment of the market. Huawei’s Smartphone business has been crippled due to US sanctions that cut the tech giant out of key components like cutting-edge chips.

Wong said Apple could actually see positive growth in the second quarter “given the slowdown in Huawei and the lack of strong high-end competitors.”

Mawston said he expects Apple to actually increase its overall market share in China by 2022 “as its affluent, loyal fans upgrade to new or more affordable 5G models. “

5G refers to the next generation of mobile internet that promises super-fast speeds. Apple launched The 2022 version of the iPhone SE is cheaper in March provide 5G.

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