The global coronavirus outbreak and its impact on supply chains will turn an expected smartphone recovery in 2020 into a year of decline, IDC said Thursday.
In November, IDC predicted smartphone shipments would improve by 1.5% in 2020, but now believes shipments will decline by 2.3%. Instead of reaching 1.4 billion shipments for the year, IDC now believes 1.34 billion will ship.
The situation for topline smartphones that can cost $1,000 or more is worse. IDC now believes that shipments for those devices will decline by 14.5% in 2020, after saying in November that they would be about flat compared to 2019.
Shipments for all smartphones will be especially hurt in the first half of the year, down by 10.6% when compared to the first half of 2019.
The virus continued to impact a wide array of industries on Thursday, including transportation and hotels, but also electronics, including semiconductor makers. The Dow closed down nearly 1,200 points, while the Nasdaq dropped 4.3%.
Apple and Intel each dropped by at least 3%, while AMD fell 6.2% and Nvidia fell 2.5%. Qualcomm declined by 4.7%. Goldman Sachs also predicted that U.S. companies will generate no earnings growth in 2020.
IDC said its latest smartphone forecast includes a multi-quarter recovery for manufacturing and logistics “given a more gradual return of Chinese workers to factories amidst persisting transportation challenges.”
China is the largest smartphone market and will take the biggest hit with the decline. “Component shortages, factory shutdowns, quarantine mandates, logistics and travel restrictions will create hindrances for smartphone vendors to produce handsets and roll out new devices,” said Sangeetika Srivastava, an IDC analyst, in a statement. “The overall scenario is expected to stabilize from the third quarter as the COVID-19 situation hopefully improves and 5G plans pick up the pace globally.”
IDC said China could see as much as a 40% decline in smartphones in the first quarter.
Despite the dour outlook, IDC tried to remain optimistic for 2021 when it sees a return to growth of 6.3% and shipments of 1.4 billion smartphones.