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After 27 consecutive months of YoY (year-on-year) decline in shipments between June 2021 and September 2023, the global smartphone market is now showing signs of recovery. Sales increased by five percent in October 2023 thanks to higher demand in emerging markets like the Middle East, Africa, and Latin America. Industry experts believe this trend will continue for the rest of 2023, with the market returning to growth in 2024.
The global smartphone market may grow by four percent in 2024
According to research firm Canalys, a better show in the final quarter of 2023 will help the smartphone market close the year with a five percent annual shipment decline, which is a notable improvement from a 12 percent decline last year. It expects a shipment increase next year, with sustained growth in the years to come. The firm has projected a shipment volume of 1.17 billion for 2024, a four percent growth from 1.13 billion estimated smartphone sales this year.
Canalys says the market will record a CAGR (Compound Annual Growth Rate) of 2.6 percent from 2023 to 2027. If it turns out to be accurate, global smartphone sales will reach 1.25 billion units in 2027. The current growth is fueled by increased smartphone adoption in emerging markets. Middle East (nine percent), Africa (three percent), and Latin America (two percent) will post a positive shipment growth this year.
Developed markets such as North America, Europe, and China, on the other hand, have a higher smartphone saturation. These regions aren’t expected to return to annual shipment growth until 2024-2025. Canalys estimates these markets to record a respective shipment decline of 11 percent, 11 percent, and six percent this year. The Asia Pacific region will also see a six percent drop in smartphone sales in 2023.
However, the region will return to growth in 2024 with a six percent increase in shipments. This, coupled with slower growth in China and North America, will help Asia Pacific emerge as the single biggest smartphone market next year. “One in three smartphones shipped in 2024 will be purchased in the Asia Pacific versus only one in five back in 2017,” said Sanyam Chaurasia, Senior Analyst at Canalys. “… driven by resurging demand in India, Southeast Asia and South Asia.”
The average selling price is on the rise
Several factors contributed to a slowdown in the smartphone market in recent years. From a component shortage and economic implications of the Russia-Ukraine conflict and the US-China trade war to longer replacement cycles, everything affected sales. However, with users replacing their phones less often, the ASP (average selling price) of devices is on the rise. The ASP was $332 in 2017 when sales peaked with over 1.4 billion shipments.
In 2023, with shipments about 20 percent below the 2017 peak, the ASP of smartphones has reached $440. With OEMs starting to focus on on-device AI capabilities, the demand for premium phones may increase in the coming years. Effectively, the ASP will grow further. “Profitability is looking up for hardware makers strategically launching flashy new features to captivate consumers in key growth markets,” said Toby Zhu, Senior Analyst at Canalys.
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