A challenging period for the smartphone industry
A lot of markets have been impacted and even seriously hit by the Covid-19 pandemic. Of course, the tourism and the travel industry have suffered the most. But the smartphone, or the electronics industry more broadly speaking, has also been impacted. Namely, the global smartphone sales suffered a decline in the first quarter of 2020. The decline continued in the second quarter, due to the fact that the pandemic didn’t end, in fact in many parts of the world it only intensified.
US sales dropped by 25% in Q2 2020
While it is clear that people spend a lot more time on their laptops, smartphones, as they stay at home more. But this is a challenging period and a lot of people are not willing to spend a lot of money on pretty much anything, let alone smartphones. People tend to buy new smartphones pretty much every year, but in a time of crisis they are willing to extend that and keep on using their older smartphones for a while longer.
While it seemed that the first quarter of 2020 will seriously hit the industry, the second quarter turned out to be even worse. Namely, in the second quarter of 2020, smartphone sales in the US plummeted by 25% year on year. The worst month in the second quarter was April, and that’s hardly surprising because lockdown measures in the US were introduced in March and were lifted towards the end of April. Many said that life as we know it pretty much stopped in April 2020.
But there is another factor here. Not only the demand has decreased, but the production has also declined. As you know, the pandemic began in China, in the Huawei area and the Huawei factory, as well as other smartphone factories have closed down and fewer phones were produced as a result.
Samsung wasn’t as affected as other vendors
On the other hand, unlike other industries which have been impacted severely, like the tourism and hospitality, the impact of the Covid-19 pandemic on the smartphone industry has not been as severe and despite the fact that the pandemic is still ongoing, it is very likely that the smartphone industry is going to go through a revitalization phase a lot sooner than other industries.
The restoration process will not be very quick though, as the losses have been quite substantial. Now, let’s take a look at the situation in the US, particularly what was going on in April this year.
As we mentioned, the sales figures dropped by 25% during the second quarter and that was a result of the closing of the sales channels. About 80% of all sales channels in the country were closed due to the pandemic. The drop in sales in April alone was 50%, so it seems that the total drop of 25%, isn’t actually that bad.
It is important to note that not all companies and not all smartphone developers were hit identically. Samsung was least affected, mostly due to its strong online presence. Samsung’s sales were affected just by 10%.