Please ensure Javascript is enabled for purposes of website accessibility

The Smartphone Market Took a Major COVID-19 Hit in Q1

By Evan Niu, CFA – Jun 2, 2020 at 9:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As one might expect, people don't buy as many smartphones during a deadly pandemic.

The coronavirus outbreak wrecked broad swaths of the global economy in the first quarter as governments pursued extreme measures to combat the spread of the disease. With tens of millions of people around the world losing their jobs, buying a new smartphone simply isn't a priority, particularly compared to essential items.

As analysts had expected, the global smartphone market took a major hit from COVID-19 last quarter.

iPhone SE in black

Apple launched the second-generation iPhone SE after the first quarter closed. Image source: Apple.

The biggest decline ever

Gartner estimates that smartphone sales fell by 20% in the first quarter to 299.1 million, marking the biggest drop in history. The outbreak disrupted the smartphone supply chain, which is concentrated in China, while simultaneously hurting demand as spending shifted toward consumer staples.

"The coronavirus pandemic caused the global smartphone market to experience its worst decline ever," Gartner senior research analyst Anshul Gupta said in a statement. "Most of the leading Chinese manufacturers and Apple (AAPL 0.66%) were severely impacted by the temporary closures of their factories in China and reduced consumer spending due to the global shelter-in-place."

Among the top five vendors, only China's Xiaomi was able to maintain stable volumes thanks to sales of its affordable Redmi devices in international markets, according to Gartner. Xiaomi has also long maintained a strong e-commerce presence. Note that Gartner's figures are based on sales to end users (sell-through), as opposed to shipments into distribution channels (sell-in).

Vendor

Q1 2020 Units

Q1 2020 Market Share

Growth (YOY)

Samsung

55.3 million

18.5%

(22.7%)

Huawei

42.5 million

14.2%

(27.3)

Apple

40.9 million

13.7%

(8.2%)

Xiaomi

27.8 million

9.3%

1.4%

OPPO

23.9 million

8%

(19.1%)

Others

108.6 million

36.3%

(24.2%)

Total

299.1 million

100%

(20.2%)

Data source: Gartner. YOY = year over year.

Samsung had already built up channel inventory and lacks strong online sales capabilities, but the South Korean tech conglomerate was able to avoid significant supply chain disruptions since its manufacturing facilities are located outside of China. China's Huawei took the biggest hit but struggles to gain traction outside of the Middle Kingdom.

Apple reported first-quarter results a month ago, after warning investors in February that it would miss its guidance due to the crisis. That included a 7% revenue decline in the core iPhone segment. Apple no longer discloses unit volumes, and its revenue metrics are based on channel sell-in, so the figures cannot be directly compared to Gartner's unit estimates. At the time, CEO Tim Cook said that the company had mostly overcome the supply chain challenges near the end of March.

"Apple had a strong start to the year thanks to its new product line up that saw strong momentum globally," Gartner research exec Annette Zimmermann added. "If COVID-19 did not happen, the vendor would have likely seen its iPhone sales reached record level in the quarter."

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$151.76 (0.66%) $0.99
Gartner, Inc. Stock Quote
Gartner, Inc.
IT
$274.96 (0.08%) $0.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.