Chip shortage, Covid weigh on China’s smartphone market even as it bounced back from pandemic lows

Customers buy iPhone13 phones at apple’s flagship smart products store in Shanghai, China, on Oct. 12, 2021.
Xing Yun | Costfoto | Barcroft Media | Getty Images

Chinese domestic smartphone shipments recovered from the hit they took during the pandemic but have still not recovered to pre-Covid levels, according to government data.

The smartphone industry has been constrained by various factors, from the global semiconductor shortage to disruption from Covid outbreaks in China.

Domestic smartphone shipments totaled 342.8 million in 2021, up 15.9% year-on-year, according to data released Tuesday by the China Academy of Information and Communications Technology (CAICT).

That was strong growth compared to 2020 which saw the market take a hit due to the coronavirus outbreak in China. Various parts of the country were locked down, effectively shutting down large parts of the economy.

Still, 2021’s smartphone shipment figure is below the 371.7 million units shipped in 2019, before the pandemic began.

The smartphone industry faced a number of issues in 2021 which perhaps held the market back from reaching pre-pandemic levels, according to Neil Shah, partner at Counterpoint Research.

Shah said the “supply chain shortage” was a big issue, referring to the global semiconductor shortage which has hit industries from autos to consumer electronics.

As part of its so-called “zero Covid” policy, China has been putting areas or cities into lockdown as it seeks to stem the spread of outbreaks throughout the year.

“Consumers are holding devices longer and the stop-start of the COVID waves is also keeping the consumer spending and shopping patterns muted,” Shah said.

The CAICT did not release a breakdown of manufacturers’ market share.

However, separate data released by market research firm Canalys on Tuesday showed worldwide smartphone shipments grew just 1% year-on-year in the fourth quarter of 2021, constrained by supply chain shortages and a resurgence in Covid cases around the globe.

Canalys said Apple retook the top spot as the world’s largest smartphone player with 22% market share, thanks to strong demand for the iPhone 13. South Korea’s Samsung followed with 20% market share.

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