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Global smartphone shipment grew for the first time since 2017, new report says

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The global smartphone market grew for the first time in four years — but the total number of devices shipped last year remained below the pre-pandemic level, according to a report from market research firm Counterpart Research.

Annual smartphone shipment grew 4% year on year to 1.39 billion handsets in 2021 even as the Covid pandemic and a worldwide components shortage hampered supplies.

Counterpoint data showed that in 2017, smartphone makers shipped 1.56 billion units and that figure subsequently declined every year from 2018 to 2020.

Pent-up demand in places like North America, Latin America and India contributed to the market’s overall growth last year, according to Harmeet Singh Walia, senior analyst at Counterpoint Research.

“Growth in the US was driven largely by demand for Apple’s first 5G-enabled iPhone 12 series seeping through to the first quarter of 2021,” Walia said in a statement. That demand continued throughout the year as the October-December quarter ended on a strong note because of holiday promotions and Black Friday sales, he added.

India saw higher replacement rates for devices, better availability as well as more attractive financing options for the mid- to high-end phones, Singh Walia said.

Counterpoint Research this week said that smartphone sales in China fell 2% year on year for several reasons, including the global semiconductor and component shortages that hindered the ability for smartphone makers to ship their devices.

“The market recovery could have been even better if not for the component shortages that impacted much of the second half of 2021. The major brands navigated the component shortages comparatively better and hence managed to grow by gaining share from long-tail brands,” Singh Walia said.

How did the top smartphone makers do?
Samsung held on to the pole position as the world’s largest smartphone maker by shipment volume despite its Vietnam factories being under a Covid lockdown for some time.

The South Korean company shipped about 271 million devices in 2021, which accounted for a 6% year-on-year growth as demand for its mid-tier phones increased.

Samsung this week said it expects demand for smartphones and tablets in the current quarter to decline from the October-December period due to weak seasonality and uncertainties over component supply. But the company said it plans to expand sales of its flagship Galaxy S series devices and roll out competitive, mass-market 5G handsets.

Counterpoint noted that some of Samsung’s growth was limited by growing competition in markets like India and Latin America.

Apple, which reported record-high market share in China last quarter, saw its global smartphone shipments grow by 18% year on year to 237.9 million units because of the strong performance of the iPhone 12 series. Its shipment volume grew in key markets like the United States, China, Europe and India.

“In China, it became the top smartphone brand in Q4 after six years thanks to the iPhone 13, consequently overtaking Samsung as the top smartphone globally in Q4 2021,” Counterpoint Research said in its report.

Chinese smartphone maker Xiaomi saw its global shipment grow by 31% year on year to 190 million devices. Though its shipment volume was significantly behind that of Samsung and Apple, Xiaomi has grown in recent years to become the third-largest smartphone maker in the world.

In fact, it’s now the top smartphone brand in India after dethroning Samsung in 2018.

Oppo and Vivo also registered double-digit growths last year, shipping 143.2 million and 131.3 million devices, respectively.

Counterpoint Research said in its report that there’s reason to be optimistic for the smartphone industry’s growth prospects in 2022 if the world gets a handle on the pandemic and if supply chain shortages are resolved by the middle of the year.

Some analysts and investors, however, expect the global chip shortage to last till end of this year or well into 2023.

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BUSINESS

US stocks suffer biggest daily drop in almost two years

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US stocks posted the biggest daily drop in almost two years as investors assess the impact of higher prices on earnings and prospects for monetary policy tightening on economic growth. The dollar and Treasuries gained amid a pickup in haven bids.

The selloff sent the S&P 500 down 4%, with the plunge in consumer shares surpassing 6%. Target Corp. tumbled more than 20% in its worst rout since 1987, after trimming its profit forecast due to a surge in costs. Shares of retailers from Walmart Inc. to Macy’s Inc. were caught in the downdraft. The Nasdaq 100 fell the most among major benchmarks, dropping more than 5% as growth-related tech stocks sank. Megacaps Apple Inc. and Amazon.com Inc. slid at least 5%.

Treasuries rose across the board, sending the 10- and 30-year Treasury yields down as much as 11 basis points. The dollar rose against all of its Group-of-10 counterparts, except the yen and Swiss franc. Gold caught bids in the move into havens.

The benchmark S&P 500 is emerging from the longest weekly slump since 2011, but any rebounds in risk sentiment are proving fragile amid tightening monetary settings, Russia’s war in Ukraine and China’s Covid lockdowns.

In some of his most hawkish remarks to date, Federal Reserve Chair Jerome Powell said Tuesday that the US central bank will raise interest rates until there is “clear and convincing” evidence that inflation is in retreat. Chicago Fed President Charles Evans said Wednesday he sees a half-point rate increase at next month’s meeting and “probably thereafter.”

In Europe, new-vehicle sales shrank for a 10th month in a row as the industry remains mired in supply-chain crises, while euro-area inflation plateaued at a record high. Meanwhile, UK inflation rose to its highest level since Margaret Thatcher was prime minister 40 years ago, adding to pressure for action from the government and central bank.

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Netflix lays off 150 employees due to slow revenue growth and business needs

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Netflix is reportedly laying off nearly 150 employees in the coming days due to disappointing earnings and slow revenue growth.

According to a Variety report, the Amazon Prime Video rival might also terminate its contract with contractual contributors.

The layoffs are about 2 per cent of Netflix’s US workforce. “As we explained [in reporting Q1] earnings, our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly U.S.-based,” a Netflix spokesperson said.

The statement further revealed that the decision was primarily driven by business needs rather than individual performance. Netflix reported $7.87 billion in Q1, which was short of Wall Street’s estimates of $7.93 billion.

The report further reveals that nearly 70 part-time employees in Netflix’s animation studio will have to pack up and leave. A report by The Verge stated that about 26 contractors working on Netflix’s fan-focused Tudum website might see a termination.

“A number of agency contractors have also been impacted by the news announced this morning. We are grateful for their contributions to Netflix,” the company said.

Netflix, in its recent earnings call, revealed that it lost thousands of subscribers, which is a first for the company in over a decade.

The company expects to lose an additional 2 million in the next quarter due to the ongoing war between Russia and Ukraine. Netflix has shut shop in Russia following the country’s invasion of Ukraine.

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Dollar breaks N600/$ ceiling ahead of party’s presidential primaries

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Less than two weeks to the presidential primaries of the political parties ahead of the 2023 elections, the US dollar has broken the N600/$ mark at the parallel market and set the tone for a possible uptick in the coming days.

The black market rate had traded between N570/$ and N590/$ since the beginning of the year while the Central bank of Nigeria (CBN)’s intervention at the Nigerian Autonomous Foreign Exchange (NAFEX) has kept its rate under N420/$.

With the latest slump of the naira, the arbitrage between the parallel and NAFEX, which is regarded as the official window, is now inching close to N200/$. The spread measures the deviation of the controlled official rate from the real rate of exchange, with experts calling for liberalisation of the market to enable naira to find its true value.

The World Bank and the International Monetary Fund (IMF) have also warned of the repercussions of sustaining an artificially high naira while calling on the CBN to embark on market reform.

But the CBN has maintained that Nigeria, with the current high level of importation and underperformance of the industrial sector, cannot afford to float the naira completely as the exchange rate could spill out of control.

At the Lagos street market, yesterday, naira traded between N595/$ and N600/$ band. With the presidential primaries of the two leading political parties scheduled for Abuja next weekend, there is an expectation the demand pressure has not peaked, suggesting that naira is in for a protracted pressure.

At peer-to-peer (P2P) trading platforms, the dollar has been trading above N600 in the past three weeks, which had signaled that the black market rate could break through the psychological ceiling.

With that eventually happening, naira could be on a renewed free fall.

But there is also hope that it is a season to offload warehoused hard currencies for political campaigns to possibly shore up supply.

Experts are not sure where rising demand and supply of foreign exchange would lead the naira to, but the interplay between the movements of the two variables is a key factor in predicting the value of the naira in the tense political season. Godwin Owoh, a professor of applied economics, advised Nigerians to prepare for a steeper fall of the local currency, saying partisan politics and intra-party meetings, which are highly dollarised would bring much pressure to bear.

The CBN has promised to continue to protect the naira but its ability could be constrained by the equally falling reserve. For the first time in eight months, the gross reserves dropped below N39 billion on Monday, when CBN data put the figures at N38.92 billion. Effectively, the country’s reserves have depleted by $160 billion year-to-date.

Bismarck Rewane, an economist, had projected the reserve to collapse to $32 billion in the year as he expected the CBN to spend $8 to $10 billion defending the naira, which is taking much pressure from excessive importation.

The value of Nigeria’s imports increased by 64 per cent last year to N20.84 trillion. Sadly, the value of exports increased at a slower rate – 51 per cent – to N18. 91 trillion in the same period. The falling reserves and rising imports have put the apex bank in dire straits in its efforts to continue to defend the naira.

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