Smartphone shipments see record drop as coronavirus stops shoppers

Smartphone shipments saw their biggest ever drop in February as the novel coronavirus ravaged China, one of the world’s largest markets and a vital manufacturing hub. 

Worldwide, phone shipments fell 38% to 61.8 million units in February 2020, from 99.2 million units in the same month last year, according to Strategy Analytics. The firm attributed the “huge” drop to a collapse in demand in Asia.

“February 2020 saw the biggest fall ever in the history of the worldwide smartphone market,” Strategy Analytics analyst Neil Mawston said. “Supply and demand of smartphones plunged in China, slumped across Asia and slowed in the rest of the world. It is a period the smartphone industry will want to forget.”

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The news follows warnings by companies like Apple that they likely won’t meet their expected sales target because of the coronavirus and COVID-19, the disease caused by the virus. Apple in February cited two reasons for its update: the coronavirus was hurting both demand from Chinese customers and production capabilities inside the country. China is one of the world’s biggest markets and the primary location where devices like the iPhone are assembled. Because factories are coming online later, there’ll be iPhone shortages around the globe, Apple said at the time. 

The coronavirus was first detected in the Chinese city of Wuhan late last year. It causes an illness known as COVID-19 and has been linked to a family of viruses known as coronaviruses, which include SARS and MERS. The World Health Organization has labeled COVID-19 a pandemic. The crisis is changing the way we live and forcing people across the globe to stay at home and isolate themselves from others. 

The pandemic has caused schools to close, while other closures have swept across the country, from Broadway theaters to NBA venues. Starting Tuesday, the San Francisco Bay Area was put on lockdown, with citizens ordered to stay at home except for essential outings. It joined places like France and Spain in limiting the movement of the public, and the rest of California joined the lockdown on Thursday. The state of New York followed suit Friday.

A slow recovery?

Qualcomm CEO Steve Mollenkopf told CNBC on Thursday that phone purchases in China have returned to normal as the country recovers from the coronavirus outbreak. Qualcomm is the world’s biggest handset maker, supplying wireless chips to Apple, Samsung and most of the other major phone vendors in the world. 

“if you’re just looking at activations of cellphones in China … at the end of January, you saw a big dip,” Mollenkopf said. But purchases in that country have recovered in March. “It’s really turned back to the same level you had a year ago,” he said. “It clearly was a very difficult time in February, but it’s good to see that returning.”

He added that Qualcomm’s customers — the companies designing phones — have seen their supply chains return to about 70% to 80% capacity. 

Still, Strategy Analytics analyst Yiwen Wu on Friday warned that global smartphone shipments will remain weak throughout this month. 

“The coronavirus scare has spread to Europe, North America and elsewhere, and hundreds of millions of affluent consumers are in lockdown, unable or unwilling to shop for new devices,” Wu said. “The smartphone industry will have to work harder than ever to lift sales in the coming weeks, such as online flash sales or generous discounts on bundling with hot products like smartwatches.”

Apple, for its part, has reopened its stores in China but has closed all its retail locations outside the Asian country, indefinitely. It also has limited online iPhone purchases as COVID-19 constrains its supply chain. Consumers can buy only two iPhones or iPads per person. The last time Apple imposed such limits was 2007, when the original iPhone came out.

Apple this week introduced two new products, a new iPad with a keyboard case that has a trackpad, as well as an updated MacBook Air.