The firm now projects smartphone shipments of 1.35 billion units in 2019, a year-over-year decline of 3.1% from 1.3931 billion units in 2018. That compares to the previous forecast of 1.417 billion units in 2019, or what would have been a projected 1.7% increase. That 2019 forecast is lower by 4.7%.
“It is important to note that market uncertainty is clearly prompting vendors to accelerate certain strategies to minimize the short- and long-term impact in a challenging business environment, for example, shifting manufacturing to different countries to hedge against the risk of tariffs,” said Canalys VP of mobility Nicole Peng in a statement. “But with recent U.S. announcements on tariffs on goods from more countries, the industry will be dealing with turmoil for some time.”
While the order issued by U.S. authorities is still officially on hold during a 90-day reprieve, Canalys does expect it to go into effect and the order to strike a blow to Huawei’s ability to roll out new devices.
Huawei had enjoyed meteoric growth in recent years. While Apple iPhones shipments fell 23% in Q1 2019, Huawei’s shipments surged over 50% year-over-year and the company had set a goal of overtaking Samsung in 2020 to become the world’s top smartphone seller.
Now Huawei is scrambling to implement contingency plans. In the short term, it’s unclear whether other smartphone makers will benefit from their rival’s woes.
The report says Samsung might be in the best position to profit from Huawei’s troubles, given the South Korean company’s ability to boost production and compete on price. And Canalys is optimistic that by 2020 — with the expanded introduction of 5G phones and time to adjust sales strategies and supply chains — global smartphone sales will increase slightly.
Still, Huawei was a lone bright spot among a broader global market that has been stalling and heading into decline. Without the company’s formerly ambitious growth plans, the overall smartphone market will likely be less than robust, Canalys says.
“Smartphone fatigue and a lack of meaningful innovation are still major market forces,” said Canalys research director Rushabh Doshi in a statement. “Consumers are holding onto phones for longer. But as device lifecycles move toward a new equilibrium point, the rate of quarterly shipment decline will ease.”