IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Smartphone market projected to grow despite chip shortage

Phone shipments are expected to rise 12%, but prices may increase due to semiconductor costs

Despite the ongoing semiconductor shortage, tech market analysis firm Canalys expects global smartphone shipments to rise by a notable 12% in 2021.

This would be a significant bounce back from 2020, which saw shipments fall by 7% due to the COVID-19 pandemic. Despite this, Canalys expects the chip shortage to remain a bottleneck for smartphone manufacturers.

“Backorders are building,” said Canalys research manager Ben Stanton. “The industry is fighting for semiconductors, and every brand will feel the pinch.”

And even though smartphone shipments are projected to reach 1.4 billion units worldwide, phone manufacturers are likely to prioritize more lucrative and developed regions of the world such as the US, China and Europe, at the expense of Latin America and Africa.

Another effect of the chip shortage is that it may force phone makers to raise prices.

“The other angle to this is pricing,” said Canalys VP of Mobility Nicole Peng. “As key components, such as chipsets and memory, increase in price, smartphone vendors must decide whether to absorb that cost or pass it on to consumers.”

What's more, the growing demand for 5G phones may lead manufacturers to skimp on other features.These 5G handsets accounted for 37% of global shipments in the first quarter of 2021 and are expected to account for 43% for the full year, or more than 600 million phones, according to Canalys.

Related Resource

Consumer choice and the payment experience

A software provider's guide to getting, growing, and keeping customers

How to deliver great customer experience with digital payments - whitepaperDownload now

“This will be driven by intense price competition between vendors, with many sacrificing other features, such as display or power, to accommodate 5G in the cheapest device possible,” Stanton said. “By the end of the year, 32% of all 5G devices shipped will have cost less than $300.”

The White House says it’s exploring options to address the global chip shortage. President Joe Biden has already asked Congress for $50 billion to fund a bill that would help build more chip manufacturing capacity in the US.

Cisco CEO Chuck Robbins recently predicted it would take “another six months to get through the short term” of the shortage. Robbins added the crisis is unlikely to be fully resolved until 2022. 

Meanwhile, Dell Technologies founder and CEO Michael Dell recently said he predicts the chip crisis “will probably continue for a few years.”

Featured Resources

Four strategies for building a hybrid workplace that works

All indications are that the future of work is hybrid, if it's not here already

Free webinar

The digital marketer’s guide to contextual insights and trends

How to use contextual intelligence to uncover new insights and inform strategies

Free Download

Ransomware and Microsoft 365 for business

What you need to know about reducing ransomware risk

Free Download

Building a modern strategy for analytics and machine learning success

Turning into business value

Free Download

Recommended

The five most secure smartphones
Mobile Phones

The five most secure smartphones

11 Mar 2022
Flaw in Android phones could let attackers eavesdrop on calls
Google Android

Flaw in Android phones could let attackers eavesdrop on calls

26 Nov 2021
Smartphone shipments slip in Q3
Mobile Phones

Smartphone shipments slip in Q3

29 Oct 2021
ONF and Deutsche Telekom debut fully disaggregated Open RAN
5G

ONF and Deutsche Telekom debut fully disaggregated Open RAN

12 Oct 2021

Most Popular

Russian hackers declare war on 10 countries after failed Eurovision DDoS attack
hacking

Russian hackers declare war on 10 countries after failed Eurovision DDoS attack

16 May 2022
16 ways to speed up your laptop
Laptops

16 ways to speed up your laptop

13 May 2022
Google Russia files for bankruptcy, ends operations in the country
Business operations

Google Russia files for bankruptcy, ends operations in the country

19 May 2022