Consumer Electronics

COVID-19 Expected to Completely Wreck China Smartphone Sales

China is the world’s largest smartphone market, by far. With millions of people fundamentally unable to leave their homes or the cities they live in, shipments of smartphones are expected to crater in the first quarter by as much as 40%. The news could be ruinous to China-based smartphone giants and to Apple Inc. (NASDAQ: AAPL) and Samsung as well.

Will Wong, research manager with IDC’s Asia/Pacific Client Devices Group, said in a global smartphone markets outlook: “For the epicenter, China, we forecast the domestic market to drop by nearly 40% year over year for first quarter and even with a potential March recovery it will still be difficult to reach last year’s levels.” He was unclear about the pace of recovery, because he has no way to forecast what will happen with the spread of the virus.

IDC also cut its forecasts for the entire year. It expects worldwide shipments to drop 2.3% to 1.3 billion, compared to 2019. In the first half, the firm expects the decline to be 10.6%. IDC projects the demand for smartphones that work on ultrafast 5G networks will drive demand up sharply in the July to December period. This assumes, of course, that worldwide spread of COVID-19 has quickened and infected large numbers of people outside of China.

Samsung, the world’s largest smartphone maker, sells about 300 million smartphones a year. While it has exposure in China, its sales have a global footprint. Number two Huawei, based in China, sells most of its phones there. It sells about 240 million units a year. In third place, Oppo, which also is local to China, sells about 145 million units a year. Huawei and Oppo face ruinous results.

Apple is, in most quarters, the fourth-largest smartphone maker in the world. Although most of its fortunes are not China-based, CEO Tim Cook as made it clear that without success in China, Apple’s worldwide sales will not be up to their potential. With a new iPhone about to be released, a low response in China could undermine early sales of the model overall.

As industry after industry is deeply wounded by the spread of COVID-19, the smartphone segment gets added to the list.