US Smartphone Market to Grow 2% YoY in 2022 as Inflation Weakens Demand

LOS ANGELES and DENVER and BUENOS AIRES, Argentina and TORONTO and MONTREAL and LONDON and NEW DELHI and HONG KONG and BEIJING and SEOUL, South Korea, June 9, 2022 /PRNewswire/ -- The US smartphone market will experience 2% YoY growth in 2022, according to Counterpoint's Market Outlook Service. The latest forecast has been revised downwards from the previous forecast of 6% YoY growth in 2022, as demand will be suppressed in the remaining quarters due to inflationary pressures.

Commenting on the forecast and consumer demand, Research Director Jeff Fieldhack said, "We began the year with strong sell-in momentum, with Q1 2022 seeing 6% YoY growth due to solid postpaid demand. However, we are adjusting our shipment forecast numbers downwards as we are increasingly seeing the impact of inflation in the US market. Last year, we saw supply as a much bigger issue as chipset shortages impacted smartphone manufacturing. However, this year, it is more of a demand issue."

Commenting on channel dynamics, Senior Research Analyst Maurice Klaehne said, "Prepaid sales will be most affected by weak demand as this is the most price-sensitive segment in the US. This is also where any price increases for devices will be most heavily felt by consumers. We see national retailers feeling the impact of inflation, but it is more of a mixed bag. Walmart, a one-stop shop for groceries, tech products and much more, may be less impacted compared to Best-Buy, which is a very specialized tech retail store. Consumers will shop where it makes the most sense for them to get as much done as possible. Postpaid, on the other hand, is more insulated. Even with Verizon and AT&T raising service plan costs, we don't expect there to be a strong shift from postpaid to prepaid."

Research Analyst Matthew Orf added, "Despite the headwinds in prepaid, there are several scheduled industry events that will help low-end smartphone sales in 2022. 3G sunsets will force carriers to move subscribers onto new LTE and 5G devices. Dish will also need to move millions of subscribers to its new MVNO partner AT&T. In addition, Verizon will attempt to move as many TracFone subscribers over to its network from AT&T and T-Mobile. All these events will require users to switch to new devices, mainly LTE, which will help maintain smartphone sales despite inflationary pressures."

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SOURCE Counterpoint Research

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