Smartphones Photo: GizChina

Global chip shortage hits smartphone market as sales drop by 6 percent: Report

*Canalys’ survey indicates the outbreak of the Coronavirus (COVID-19) pandemic pandemic has had a negative impact across supply chains, particularly hitting hard the computer chip industry

Isola Moses | ConsumerConnect

As the current computer chip shortage takes its toll on new car production by most of the leading automobile manufacturers worldwide, the situation has also plummeted global smartphone sales.

The aggregate phone sales, globally, are down by 6 percent in third quarter (Q3) 2021, agency report said.

RELATED: Global Chip Shortage Forces Consumers To Pay Higher Prices: Report

ConsumerConnect had reported how the deepening chip shortage had compelled several car manufacturers to review and cut production projections while resorting to ‘improvisation’ of certain car parts in some instances.

Smartphone consumers

According to Canalys, this is as a result of a worldwide chip shortage in recent times, amid the Coronavirus (COVID-19) pandemic disrupting normal life routine and economic activities across the world.

READ ALSO: Toyota Cuts Production By 40 Percent Due To Chip Shortage September

The firm noted that the pandemic has had a negative impact across supply chains, and chips have been particularly hard hit.

Ben Stanton, Principal Analyst at Canalys, said that manufacturers are trying to keep up as best they can, but the chip shortage is a legitimate roadblock right now.

Stanton stated: “On the supply side, chipset manufacturers are increasing prices to disincentivise over-ordering in an attempt to close the gap between demand and supply.

“But despite this, shortages will not ease until well into 2022.”

What did the market look like this past quarter as a result of these supply chain issues? Well, the usual suspects maintained their market share positions, with Samsung holding steady year over year at 23 percent.

READ ALSO General Motors Yet Again, Suspends Production Over Computer Chip Shortage

Meanwhile, on the flip side, Apple saw sales increase three percentage points to 15 percent this quarter, report noted.

Xiaomi held steady in third place at 14 per cent unchanged year on year.

Manufacturers have to be concerned by this turn of events, especially as we head into the crucial holiday shopping season.

Apple released the new iPhone 13 end of September 2021, too late for this quarterly report, but no doubt timed for the shopping season.

The chip shortage issues could put a damper on its plans. Even though both Samsung and Apple make their own chipsets for their mobile devices, each company is still feeling the impact of the chip component shortage.

Accordingly, Stanton disclosed that it is unlikely consumers would witness any cost-cutting this year, as manufacturing costs continue to spiral upward.

Instead, he anticipates that we may see more bundling of phones with other devices as a buying incentive.

“Customers should expect smartphone discounting this year to be less aggressive. But to avoid customer disappointment, smartphone brands which are constrained on margin should look to bundle other devices, such as wearables and IoT, to create good incentives for customers,” Canalys Principal Analyst said.

The computer chip shortage could persist even longer than Stanton is predicting, perhaps as long as two to three years, according to the president of Hisense, Jia Shaoqian, whose company makes devices like home appliances and consumer goods, CNBC report also said.

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