Consumer demand for smartphones will continue to fall into 2023

Posted:
in General Discussion
Murata Manufacturing, a company that makes components for the iPhone, believes decreasing smartphone sales will continue into 2023.

iPhone 14 family
iPhone 14 family


The company estimates that 1.36 billion units made up the global smartphone market in 2021. However, when all is said and done, calendar year 2022 sales in total may be less than 1.2 billion, primarily led by a drop in demand in China.

Murata had believed Chinese demand for smartphones would bounce back after the end of COVID-19 lockdowns in major cities. But instead, consumers haven't increased their spending except for high-end models such as the iPhone 14 Pro and iPhone 14 Pro Max.

"Consumers might have been willing to buy new phones even with small upgrades if the economy were in a better shape," said Murata President Norio Nakajima in an interview. "What I'm afraid will happen is smartphones get further commoditized and people will wait even longer before upgrading."

Murata has first-hand experience with the current smartphone decline. The Japan-based company supplies important components not just to Apple, Samsung, but also to nearly every other smartphone assembler in China. Its shares have dropped more than 20% as its customers face declines in shipments.

Despite the decline in consumer demand, Apple has still collected 80% of all the profit in the industry. The company's revenues grew 3% year-over-year, with the second-highest position of 16% for smartphone shipments.

Overall, global smartphone revenues dropped 2% year over year and 15% quarter-to-quarter to $95.8 billion in the second fiscal quarter of 2022. However, global profits grew 6% year-over-year to $13.1 billion in the same timeframe, suggesting that the higher-end phones -- which is essentially every phone that Apple sells -- had at the very least, maintained sales pace.

Analysts at Morgan Stanley have hopes for Apple, believing it will beat Wall Street's expectations for the September quarter, even though it trimmed its price target for AAPL.

The investment bank predicts 51.1 million iPhone shipments in the September quarter with an average sale price of $838, which may lead to $43 billion in iPhone revenue.

Read on AppleInsider

Comments

  • Reply 1 of 11
    rob53rob53 Posts: 3,257member
    Doesn't surprise me when the housing market is falling, inflation is killing regular people (while rich people keep getting richer), gas prices stay up (USA needs to get off the global market fiasco and/or heavily fine oil companies for price gouging), food prices are staying high so what money do people have to buy phones?
    muthuk_vanalingamwatto_cobra
  • Reply 2 of 11
    DAalsethDAalseth Posts: 2,799member
    Makes sense to me. I’m using a three year old iP11 with 87% battery. Where I live 5G means nothing. There is simply no reason for me to upgrade. Not this year or next. Maybe in 2024 I might need to replace the battery. But as for a new phone, barring some unfortunate accident, why? 
    edited October 2022
  • Reply 3 of 11
    rob53rob53 Posts: 3,257member
    DAalseth said:
    Makes sense to me. I’m using a three year old iP11 with 87% battery. Where I live 5G means nothing. There is simply no reason for me to upgrade. Not this year or next. Maybe in 2024 I might need to replace the battery. But as for a new phone, baring some unfortunate accident, why? 
    I bought my 14 Pro Max for the cameras. Had an 11 Pro Max. Waiting for Sandmarc to release their 14 Pro Max case so my lens work again. The 3x telephoto is really nice.
    watto_cobra
  • Reply 4 of 11
    danoxdanox Posts: 2,950member
    Half the world doesn’t have up to date tech/software or anything else, but the party is over sounds like first world navel gazing.
    edited October 2022
  • Reply 5 of 11
    rob53 said:
    Doesn't surprise me when the housing market is falling, inflation is killing regular people (while rich people keep getting richer), gas prices stay up (USA needs to get off the global market fiasco and/or heavily fine oil companies for price gouging), food prices are staying high so what money do people have to buy phones?
    Agreed w your inflation theory. Supply and demand, but I thought we are the largest oil and gas producers? Why are we begging from Valenzuela and OPEC? Wondering Y??
    watto_cobra
  • Reply 6 of 11
    tmaytmay Posts: 6,362member
    Kuyangkoh said:
    rob53 said:
    Doesn't surprise me when the housing market is falling, inflation is killing regular people (while rich people keep getting richer), gas prices stay up (USA needs to get off the global market fiasco and/or heavily fine oil companies for price gouging), food prices are staying high so what money do people have to buy phones?
    Agreed w your inflation theory. Supply and demand, but I thought we are the largest oil and gas producers? Why are we begging from Valenzuela and OPEC? Wondering Y??
    Oil is a fungible resource, as are many basic foods such as grains and vegetable oil. The U.S. is attempting to get more oil on the World market to replace oil that is sanctioned from Russia. For political and economic reasons, OPEC has reduced oil to the market.*

    fun·gi·ble

    adjective
    1. (of goods contracted for without an individual specimen being specified) able to replace or be replaced by another identical item; mutually interchangeable.
      "it is by no means the world's only fungible commodity"

    *Might be time for the U.S. to stop arm sales to our authoritarian "friends" in the Middle East. Let them source their weapons from China or Russia, and good luck with defending themselves from Iran without Western military assistance.
    watto_cobra
  • Reply 7 of 11
    fred1fred1 Posts: 1,116member
    If demand continues, does that mean it will still be impossible to buy the SE (for example) at any of the 12 stores closest to me as it’s been for several days?
    When will Apple be able to keep enough stock in its stores?
    watto_cobra
  • Reply 8 of 11
    LeoMCLeoMC Posts: 102member
    I wanted to get the 14 Pro but the fact that it is 300€ more expensive than it is in US is making me completely rethink Apple. I like their products and I will stil be using them, but I will make sure my upgrades are rarer.
  • Reply 9 of 11
    DAalsethDAalseth Posts: 2,799member
    LeoMC said:
    I wanted to get the 14 Pro but the fact that it is 300€ more expensive than it is in US is making me completely rethink Apple. I like their products and I will stil be using them, but I will make sure my upgrades are rarer.
    That is the Catch 22 Apple, and a lot of other companies, are in. They raise the price to maintain profits, so people upgrade less often which cuts into profits. This is helped by improving quality that allows things to stay functional and useful for longer. My Toyota dealer is offering me all sorts of deals to get me to trade in my 17 year old Prius. No reason to. Apple and my call carrier would love to have me upgrade my three year old phone. Why? Heck I get regular notes from the realtor that we used to buy our house. ‘Lots of great properties are available, how about trading to a newer place’. But the one I have works so there’s no reason to trade. 

    Improving quality is the enemy of consumer culture.
  • Reply 10 of 11
    LeoMCLeoMC Posts: 102member
    DAalseth said:
    LeoMC said:
    I wanted to get the 14 Pro but the fact that it is 300€ more expensive than it is in US is making me completely rethink Apple. I like their products and I will stil be using them, but I will make sure my upgrades are rarer.
    That is the Catch 22 Apple, and a lot of other companies, are in. They raise the price to maintain profits, so people upgrade less often which cuts into profits. This is helped by improving quality that allows things to stay functional and useful for longer. My Toyota dealer is offering me all sorts of deals to get me to trade in my 17 year old Prius. No reason to. Apple and my call carrier would love to have me upgrade my three year old phone. Why? Heck I get regular notes from the realtor that we used to buy our house. ‘Lots of great properties are available, how about trading to a newer place’. But the one I have works so there’s no reason to trade. 

    Improving quality is the enemy of consumer culture.
    My only problem is with the fact that Apple expects me to pay (way) more for the same product just because I buy it from an EU country; I understand the $/€ difference (pre-Ukraine) and the fact that VAT is higher than sales tax in US, but a 300€ difference (or little under 30%) is ludicrous.
    JanNL
  • Reply 11 of 11
    cpsrocpsro Posts: 3,205member
    Just came across this page on apple.com that says returned iPhones and iPads are assessed a restocking fee:  25% for open-box and 15% for unopened. I've never heard of this before.
    https://www.apple.com/sg_smb_5200/shop/help/returns_refund
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