In the final quarter of 2022, while Apple was enduring one of its toughest periods due to disruptions in the world’s biggest iPhone factory, the tech giant still managed to edge out Samsung as the brand that was most in demand. However, it was not all gloom and doom for the South Korean giant because while it may have finished the quarter second in terms of market share, Samsung still managed to conclude 2022 as the largest vendor in the industry.
Both smartphone giants achieved those heights while the global smartphone market was going south. It was, for the global smartphone market, the year with the worst annual performance in a decade. In fact, according to research firm Canalys, 2022 was an “extremely challenging year for all vendors” with full-year 2022 shipments declining by 11% to fewer than 1.2 billion.
“Smartphone vendors have struggled in a difficult macroeconomic environment throughout 2022. Q4 marks the worst annual and Q4 performance in a decade,” Canalys Research Analyst Runar Bjørhovde said in a news release this week. Yet, amid the industry’s somber performance, Apple Inc reclaimed the top spot in the final quarter of last year and achieved its highest quarterly smartphone market share ever at 25%.
Ironically, Apple’s rise took place despite facing shrinking demand and one of its worst manufacturing issues in Zhengzhou, where the world’s biggest iPhone factory is located. Although Samsung finished the quarter second with a 20% market share, the South Korean giant still toppled Apple on an annual basis. On the other hand, Xiaomi retained third place despite its market share falling to 11% in Q4, largely due to challenges in India. OPPO and vivo rounded out the top five, taking 10% and 8% market shares respectively.
Bjørhovde also noted how vendors are highly cautious with taking on new inventory, thus contributing to low shipments in Q4. “Backed by strong promotional incentives from vendors and channels, the holiday sales season helped reduce inventory levels. While low-to-mid-range demand fell fast in previous quarters, high-end demand began to show weakness in Q4,” he added. Overall, Canalys analysis indicated that the market’s performance in 4Q22 stands in stark contrast to the same period a year before, which saw surging demand and easing supply issues.
In terms of outlook, Canalys Research Analyst Le Xuan Chiew believes vendors will approach 2023 cautiously, prioritizing profitability and protecting market share. “Vendors are cutting costs to adapt to the new market reality. Building strong partnerships with the channel will be important for protecting market shares as difficult market conditions for both channel partners and vendors can easily lead to strenuous negotiations.”
Overall, Canalys forecasts flat to marginal growth for the smartphone market in 2023, with conditions expected to remain tough. “Though inflationary pressures will gradually ease, the effects of interest rate hikes, economic slowdowns and an increasingly struggling labor market will limit the market’s potential,” added Chiew. That will adversely affect saturated, mid-to-high-end-dominated markets, such as Western Europe and North America, he noted.
Although China’s re-opening will improve domestic consumer and business confidence, Canalys is of the belief that government stimuli are only likely to show effects in six to nine months, and demand in China will remain challenging in the short term. “Still, some regions are likely to grow in the second half of 2023, with Southeast Asia in particular expected to see some economic recovery, and a resurgence of tourism in China helping to drive business activities,” Chiew concluded.
