Mobile phone market set for further slump, with 5G the only bright spark

• The global mobile phone sector is in for another year of pain, according to a 2023 forecast from CCS Insight
• New device sales are affected as people become increasingly conscious of cost and the environment 
• Strong sales of 5G-enabled premium devices offer the only shred of good news for device manufacturers this year

Global mobile phone shipments are this year set to hit their lowest point in more than a decade, according to a new forecast from research house CCS Insight, though sales of new 5G-enabled handsets are expected to remain strong, defying global economic pressures. 

According to the CCS Insight team, global mobile phone shipments are expected to plummet by 4% year on year to 1.35 billion units in 2023, of which 1.16 billion will be smartphone devices.

To put the forecast number into perspective, if the market achieves shipments of 1.35 billion, that will be 32% lower than the total number of mobile devices shipped in 2015, when the market almost hit the 2 billion mark (see chart, above).

But a lot has changed in the past eight years, as people are not only “happy to use the same phone for longer,” which has been the overall trend for a few years now. There is also “the continuous pressure from global economic uncertainty on one hand, and the growing appeal of used devices on the other,” noted Marina Koytcheva, vice president of forecasting at CCS Insight.

The market for second-hand phones is expected to grow further in 2023, reaching 330 million units, as people not only “seek value-for-money options in the face of a weak economy” but also opt for more environmentally friendly options, explained CCS Insight senior analyst, Parul Saxena.

According to the company’s forecast, the dip in new device shipments will be most notable in the first half of 2023, as the global economy is expected to improve in the second half of this year, particularly during the final quarter. This is a view that has been shared previously by IDC, another research firm.

The CCS Insight team expects the market declines will be most notable in western Europe and North America, while demand is expected to remain stable in India where 5G services are currently being rolled out, and to pick up in China following the lifting in late 2022 of restrictions related to the Covid-19 pandemic.

In terms of device affordability, Saxena argued that brands operating in the premium segment will benefit from the polarisation of the market, as higher-income groups of consumers will be less affected by the weaker economy, while customers in the low- and mid-range part of the market are expected to become even more price sensitive.

According to CCS Insight’s prognosis, the high-end market will remain “relatively strong” this year, with 5G-capable phones hitting 700 million shipments globally. This figure will represent more than one in every two mobile phones sold in 2023 as 5G uptake continues in major markets, such as China – see 5G, enterprise services fuel growth at China’s telco trio.

This year is, however, expected to be the nadir for the global mobile phone sector as, in more positive news, the market is forecast to recuperate slightly in 2024 to achieve shipments of 1.4 billion, though CCS Insight doesn’t believe demand for new devices will recover to the levels recorded in the mid-2010s. This is largely because the market for used devices is expected to experience ongoing growth – this year second-hand devices will grab about 20% of the overall global mobile phone sector, with that proportion set to reach some 40% by 2027 as end users become increasingly environmentally conscious.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV