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Hardware shortages could plague 2017 smartphone sales

Gartner: Samsung is top of the smartphone pile, while Apple sees a decline

Samsung saw increasing demand for 4G smartphones in the three months to June, but supply shortages of some critical components are likely to drive premium smartphone sales down later this year, according to research by Gartner.

Global smartphone sales rose to more than 366 million units in Q2 of 2017, a 6.7% increase over the same quarter in 2016. The rise helped some mobile phone makers to bolster their market shares, including leader Samsung, which now has 22.5% of the market.Its sales grew 7.5% year-on-year to sell 82.5 million handsets following three consecutive quarterly declines due tofallout from the Note 7.

However, while sales of all types of smartphone were up during the year, growing concerns about the rising cost of components and supply shortages for some critical hardware pointed to a fall in growth during the second half of 2017.

"We expect a shortage of flash memory and OLED displays will affect premium smartphone supply in the second half of 2017," said Anshul Gupta, research director at Gartner.

He pointed to brands such as Huawei, which has already suffered from a shortage in flash memory for its mobile range, and traditional brands such as HTC, LG and Sony that are "stuck between aggressive Chinese brands and the dominating market shares of Samsung and Apple".

Apple is not immune to supply issues, particularly when it comes to sourcing OLED screens for its upcoming iPhone 8. The world's most valuable brand has been reliant on Samsung for premium display technology, but the South Korean tech giant has been unable to produce enough for both brands, according to various reports.

The tech giant saw sales stagnate, dropping 0.2% year over year to sell 44.3 million handsets. However it has yet to benefit from the significant sales spike that the iPhone 8 will bring in the last quarter of 2017. Sales are also likely to be bolstered by the release of iOS 11, which promises to bring augmented reality, improved Siri support and machine learning to Apple devices.

"Apple's sales in emerging markets are expected to grow as older-generation iPhones continue to attract buyers," said Gupta. "The new iOS 11, which will include augmented reality, machine learning, an improved Siri and a new display design, will likely fuel strong iPhone sales in the fourth quarter of 2017, and help Apple increase its sales in 2017."

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