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Now could be a great time to trade in your smartphone: Here's why

Ene, 27, 2023 Hi-network.com
Image: Getty Images / Marko Geber

Smartphone shipments in the fourth quarter of 2022 declined 18.3% year on year to 300.3 million units, marking the biggest quarterly decline on record, according to tech analyst IDC. 

The fourth quarter has historically brought joy to smartphone vendors and retailers, but this year it did not deliver and the 18% decline contributed to an 11.3% decline for the full year. 

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Smartphone vendors shipped 1.21 billion smartphones in 2022, which IDC notes is the lowest level since 2013 and was due to consumers tightening belts, inflation, and an unstable economic outlook. 

Even Apple, which gained marketshare thanks to the iPhone 14 series launch in September, saw its shipments decline by 14.9% year on year, from 85 million to 72.3 million, according to the analyst's calculations.Apple will share its fiscal Q1 2023 earnings next Thursday, February 2, which covers the fourth calendar quarter. In November, the company warned that iPhone 14 shipments would be lower in the holiday season due to China's COVID-19 restrictions at its key iPhone assembly facility in Zhengzhou. 

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Given the economic uncertainty, smartphone vendors preferred to exhaust inventory over stuffing the channel with devices that might not get purchased, according to IDC.   

"We have never seen shipments in the holiday quarter come in lower than the previous quarter. However, weakened demand and high inventory caused vendors to cut back drastically on shipments," said Nabila Popal, research director at IDC Worldwide Tracker. 

"Heavy sales and promotions during the quarter helped deplete existing inventory rather than drive shipment growth. Vendors are increasingly cautious in their shipments and planning while realigning their focus on profitability. Even Apple, which thus far was seemingly immune, suffered a setback in its supply chain with unforeseen lockdowns at its key factories in China. What this holiday quarter tells us is that rising inflation and growing macro concerns continue to stunt consumer spending even more than expected and push out any possible recovery to the very end of 2023."

Fellow tech analyst Canalys reported worldwide Q4 2022 smartphone shipments fell by 17% year on year, while shipments across the year declined 11% to just under 1.2 billion. 

Anthony Scarsella, research director at IDC Worldwide Quarterly Mobile Phone Tracker, says smartphone refresh rates exceed 40 months (3.3 years) in most major markets. 

One segment that is growing is second-hand and refurbished smartphone shipments. In 2022, used smartphone shipments increased 11.5% year on year to 283 million. In other words, used smartphone shipments are outpacing new smartphone shipments. The market is being spurred by vendors such as Apple promoting trade-in programs to accelerate hardware upgrades, often by offering higher trade-in values. 

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Scarsella reckons 2023 could be a good year for those looking to trade-in a relatively new phone for a newer one. 

"With 2022 declining more than 11% for the year, 2023 is set up to be a year of caution as vendors will rethink their portfolio of devices while channels will think twice before taking on excess inventory. However, on a positive note, consumers may find even more generous trade-in offers and promotions continuing well into 2023 as the market will think of new methods to drive upgrades and sell more devices, specifically high-end models," Scarsella notes. 

The top five vendors' shipments declined between 15% and 26% year on year in Q4 2022. Apple led the field with 72.3 million iPhones, followed by Samsung's 58.2 million, with 15.6% decline. Xiaomi's shipments declined 26.3% to 33.2 million. Oppo and vivo rounded out the top five with 25.3 million and 22.9 million units, respectively.  

For the full year, Samsung led with 260.9 million shipments, followed by Apple's 226.4 million. Xiaomi, Oppo, and vivo shipped 153.1 million, 103.3 million, and 99 million units, respectively. 

Source: IDC

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