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Mobile Device Market Still Awaiting Recovery

The mobile devices market has experienced three years of unpredictable demand. The global pandemic, geopolitical pressures, supply chain issues, and macroeconomic headwinds have hindered the sector's consistent growth potential.

This extremely challenging environment has dramatically affected both demand and supply chains. It has led to subsequent inflationary pressures, leading to a worsening global cost of living crisis suppressing growth and confidence in the sector.

In tandem, mobile device industry stakeholders have become more cautious triggering market uncertainties.

Mobile Device Market Development

Operating under such a backdrop, the development of mobile device ecosystems and vendor landscapes have been impacted severely.

Many of these market pressures persisted throughout 2022 and now into 2023, borne chiefly by the smartphone market.

According to the latest worldwide market study by ABI Research, worldwide smartphone shipments in 2022 declined 9.6 percent Year-over-Year (YoY) to reach 1.207 billion units.

However, ABI analysts now anticipate that the market will see a marginal 2.4 percent increase in 2023 to 1.24 billion.

"Despite the economic climate and geopolitical volatility conspiring to outweigh any growth potential in 2022, smartphone demand is expected to be counterbalanced in 2023 by 5G device affordability as a primary growth driver," said David McQueen, research director at ABI Research.

Smartphone sales are also expected to be buoyed throughout the year by large fledgling markets continuing their migration to 5G, notably India, and as smartphones replace feature phones.

While there are signs that softened demand in some markets, such as China, will rebound through 2023, the premium and high-end smartphone market is expected to remain resilient as it is relatively unaffected by economic fluctuations.

"It will be the mobile device industry's ability to strike a positive balance between the impact of disrupters against the gradual return of supply chains, consumer sentiment, market confidence, and strength of demand that will determine the speed of recovery and instigate a longer-term sustainable path," added McQueen.

With these market vectors in mind, ABI Research expects smartphone shipments to grow to 1.33 billion by 2028 at a compound annual growth rate (CAGR) of 1.5 percent.

As a vital part of this overall growth, 5G smartphones will increase from 825 million in 2023 to 1.244 billion by 2028, accounting for 67 percent and 93 percent of the total, respectively, indicating that global 5G penetration still has some way to go.

Conversely, spikes in demand for items like tablets, notebooks, and Chromebooks caused during the pandemic and by changes in consumer behavior have been tempered after demand contracted in 2022, and shipments are expected to fall over the coming years.

While market confidence is under such pressure, it is proving difficult to predict the speed at which future demand will recover in the short- and mid-term across regions, as well as for the many mobile device product types.

Moreover, there is still much to be done to fully expose the value of the 5G ecosystem and realize its full potential, which the introduction of 5G-Advanced by 2024 will bolster.

Regardless of the mobile device industry's current woes still looming large, the global market could be buoyed over the next 18 months. Anything is possible, given the recent history.

Outlook for Mobile Device Applications Growth

The upside includes additional technology migration and consumers' eagerness to embrace new innovative mobile experiences and services, enhanced broadband speeds, leading-edge form factors, including foldable devices, and greater processing power.

That said, I have done my part to drive demand for Android smartphone manufacturers. I recently purchased a new 5G Samsung smartphone. The motivation for my purchase was a new software app that I needed to use and my older phone simply wasn't up to the task.

We know from other research that consumer and business users are keeping their smartphones for more extended periods of time. Will this trend continue for the duration of 2023? Let's wait and see.

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