CCS Insight: ‘Mobile phone market has peaked at 2bn units per year’

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Analyst expects shipments to fall 1.3 per cent this year with looming component shortages and price hikes putting pressure on smaller smartphone makers

CCS Insight has claimed the global mobile phone market has peaked at two billion units per year after decades of growth.

This is according to the analyst’s latest ‘Market Forecast: Mobile Phones Worldwide 2016-2020’ report, which predicts that total shipments will slip 1.3 per cent this year from 2015 to 1.95 billion units.

It said a notable exception is China, where the market is recovering from a weak 12 months last year but echoing the global trend, total shipments here are expected to stabilise at around 450 million units per year until 2020.

CCS Insight’s forecast shows smartphones remain to dominant phone of total volumes and will account for almost three quarters of the market in 2016, rising to nearly 90 per cent in four years time.

The analyst added that smartphone shipments are forecast to rise 4.1 per cent from 2015 to 1.42 million units this year.

Tipping point

However, CCS Insight director of forecasting Marina Koytcheva believes the pressure on smaller manufacturers is mounting as a result.

“After years of analysts and commentators talking about mobile phone market peaking within the visible horizon, it has now reached that point.

“As growth is depleting, competition is intensifying and it comes as little surprise that margins are being squeezed harder than ever. Companies without the scale advantages of manufacturers such as Samsung, Apple or Huawei will find it much harder to make money.”

CCS expects the situation to accelerate by reports of component price increases in the second half of 2016 as a result of a shortage of screens, camera modules and memory.

It said these shortages are being caused by a combination of the larger manufacturers buying all the available output and recent earthquakes in Taiwan that have disrupted production.

Profit difficulties

“This is the first time we have seen component price rises for years,” added Koytcheva. “Phone makers with low volumes will find it almost impossible to turn a profit in these conditions without raising the prices of their products.

“It’s a great opportunity for the big players like Huawei and Samsung to exploit their scale, apply pricing pressure and strengthen their leading positions.”

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