Qualcomm chief executive Cristiano Amon believes sales of high-end smartphones will be unaffected by any economic slowdown, telling the World Economic Forum (WEF) in Davos that he sees room for growth even in the current climate.
Sales of smartphones slumped by 12.5% during 2020 as retailers closed their doors and consumers delayed purchases, however, the reopening of marketplaces and the availability of 5G handsets at more price points contributed to a 6% increase in 2021.
However ongoing challenges concerning component shortages (opens in new tab), supply chain disruption, and lockdowns in China have conspired to threaten any further growth.
These issues have been compounded by wider macroeconomic and geopolitical factors affected the global economy, with the mobile industry fearing that consumers might postpone or abandon smartphone purchases.
Qualcomm is the market leader in smartphone chips but has a near-monopoly in the premium segment, supplying various components including processors and modems, to manufacturers. It is expanding its technological capabilities and entering new areas like augmented reality (AR).
Amon said that the maturity of the smartphone market meant that there was limited scope for growth, the pandemic had elevated the role of connectivity and mobile technology, meaning there was a demand for more advanced handsets and new features.
“People are looking to have better phones, with more capabilities,” Amon is quoted as saying. “Those are things that may keep the mobile market stable even in the face of inflation and with the risk of a slowdown.”
There is some strength to the argument, given prospective buyers of premium devices might be less affected by the rising cost of living, while premium handsets have been more insulated from the shortage of components.
However, despite Qualcomm’s optimism, Bloomberg reports that Apple plans to keep iPhone production levels static in 2022, asking suppliers to assemble around 220 million devices this year.
Industry observers believe the second half of 2022 will offer more favourable conditions to all manufacturers but Apple, the world’s second largest, will benefit from high brand loyalty and the launch of the iPhone 14 later this year, which is expected to be more of a technological leap forward than the current flagship model.