Despite the restart of supply chains, a report by GlobalData says the Covid-19 pandemic will adversely affect the telecom sector for a long time, causing a supply and output slump, especially for popular smartphone brands.
According to the data and analytics company, consumer spending in the telecom sector will remain inhibited and cause delivery backlogs for popular smartphones even as supply chains restart.
“In the short term, the financial impact and ripple effect of lockdowns will mute consumer demand for expensive flagship phones and stretch upgrade cycles. Carriers and original equipment manufacturers (OEMs) will have to take strong measures to spur consumer spending on smartphones,” commented Anisha Bhatia, Senior Technology Analyst at GlobalData.
Bhatia believes that demand for smartphones is likely to remain weak in Q2 2020 as the majority of people in the US and Europe continue to remain on lockdown and will subsequently struggle with the prolonged economic uncertainties that come post-shutdown.
GlobalData disclosed that China saw a nosedive in smartphone sales in January 2020, but this is now slowly rebounding. As most phone sales occur in retail stores, the US will likely see a drop in sales too as leading mobile operators have temporarily closed many of their retail locations.
New phone releases expected in 1H 2020 are already in an advanced stage of development, so their release is imminent. Carriers have stepped up to offer unlimited data to their customers temporarily, as data and voice services are now on the list of consumer essentials, so, consumer churn is expected to remain low.