Smartphone market hurt by supply chain issues in third quarter

Shipments were expected to decline, but not by this much.

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Samsung and Apple topped smartphone shipments in the third quarter.

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Worldwide shipments of smartphones took a greater hit than expected in the third quarter, declining 6.7% after posting double-digit growth in the first half of 2021, according to an IDC report Thursday. The market researcher attributed the decline to disruption in the supply chain that has been dogging many device manufacturers.

"The supply chain and component shortage issues have finally caught up to the smartphone market, which until now seemed almost immune to this issue despite its adverse impact on many other adjacent industries," Nabila Popal, research director with IDC's Mobility and Consumer Device Trackers, said in a statement. "In all honestly, it was never fully immune to the shortages, but until recently the shortages were not severe enough to cause a decline in shipments and was simply limiting the rate of growth."

Smartphone makers shipped 331.2 million units during the quarter and while shipments were expected to experience a seasonal decline of 2.9%, the actual drop was more dramatic and varied greatly based on regions. Central and Eastern Europe suffered the greatest decline of 23.2%, while the US and Western Europe experienced less severe drops of 0.2% and 4.6%, respectively.

Samsung retained its markets title with a 20.8% share, down from 22.7% in the year-ago quarter, on 69 million units. Apple regained the No. 2 spot by shipping 50.4 million units shipped for a 15.2% marketshare, up from 11.7% a year ago. Xiaomi came in a close third with 44.3 million units shipped for a 13.4% share, up from 13.1% despite shipping 2 million fewer units than a year ago.

In addition to component shortages affecting all vendors, the industry has been hit by other challenges, including stricter testing and quarantining policies, that will affect production well into 2022.

"Despite all efforts to mitigate the impact, all major vendors' production targets for the fourth quarter have been adjusted downwards," Popal said. "With continued strong demand, we don't anticipate the supply-side issues to ease until well into next year."