Amid a drastic shortage of storage and memory chips, the global smartphone market grew by 1 per cent in the first quarter of this year, compared to a year ago, according to research firm Omdia yesterday.
However, it warned that the slight increase in shipments has come because the supply-side costs have not yet been factored in, since manufacturers have been “front-loading” to support shipments so far.
So, for now, smartphone makers have not fully pushed up their prices across all markets despite sharp rises in memory and storage costs.
Prices for mobile DRAM and NAND chips, used for memory and storage in smartphones, rose by about 90 per cent quarter-on-quarter in the first quarter, according to Omdia. This is going to rise a further 30 per cent in the coming quarter, it noted.
“Vendors have little choice but to raise prices as cost pressures intensify,” said Sanyam Chaurasia, a principal analyst at Omdia, in a report yesterday.
He added that manufacturers such as Xiaomi and Transsion, which sell more entry and mid-tier smartphones with slimmer margins, might be impacted more by the higher costs of components.
Samsung, the top smartphone maker with 22 per cent of the market, has a “market-selective” approach, he noted, while Apple (number two with 20 per cent of the market) has held its pricing so far.
Like the cost of PCs, smartphone prices are expected to grow later this year, though. As a result, shipments will likely decline by around 15 per cent this year, estimated Omdia.
For now, the uncertainty around pricing and availability is prompting some channel partners to increase inventory, temporarily supporting shipments, said Runar Bjorhovde, another principal analyst at Omdia.
“However, this will delay rather than offset the impact for vendors, with pressure expected to intensify as the year progresses,” he noted.
