The impact of the COVID-19 pandemic on supply chains and the near-certainty of a global recession are expected to depress 2020 smartphone shipments by 3.7% to 1.33 billion units, according to Kagan. Meanwhile, widespread build-outs of 5G networks and the increasing availability of 5G handsets are expected to temper the negative effects of a global recession and help slow the decline of worldwide shipments to a negative 1% CAGR from 2019 through 2024. Worldwide smartphone shipments are expected to bump up in 2021 and 2022 as more 5G-capable devices become available and an increasing number of users migrate to 5G — especially in mature markets.
The COVID-19 pandemic has severely disrupted the smartphone supply chain. China shut down its factories for the Lunar New Year in January, and they remained closed well into February to slow down the spread of the virus. With a large chunk of smartphone component manufacturing and assembly based in the country, worldwide shipments slowed considerably in the first quarter of 2020.
Despite this, worldwide shipments are expected to recover somewhat in the latter half of 2020, with China's manufacturing sector having restarted when quarantine restrictions were largely lifted in April 2020. Many smartphone vendors are already trying to return to business as usual, with all the top brands releasing new phones in the first quarter of 2020.
Wider rollouts of 5G networks, along with the proliferation of 5G handsets, should bolster demand in the coming years. Since the second quarter of 2019, a number of 5G handsets have already debuted across different price ranges, with devices evenly split between those with a starting price under $750 and those over. More devices are expected to come out throughout the forecast period, with the price of 5G handsets declining over time. As 5G networks mature, 5G capability in handsets will become common and more users will begin to upgrade to the new standard.