"We Are Not Optimistic": Top Sony Exec Doesn't See Smartphone Demand Recovery This Year

The downturn in the global smartphone market is likely to persist through this year, according to Tokyo-based Sony Group Corp., the world's top provider of image sensors for handheld devices. 

"We are not optimistic about the smartphone market outlook this year," Sony president and COO Hiroki Totoki told analysts during an earnings call on Friday. 

"In China, handset inventories in distribution channels increased in March, and we expect prices of low-end and midrange image sensors will fall a lot due to piled-up inventories by competitors," Totoki said. 

Sony has a direct view of device inventories and demand as a top supplier to the world's largest smartphone makers, which means it can easily forecast industry trends. Totoki said oversupply concerns would pressure handset makers through the second half of this year. 

Totoki expects softness in premium handsets in the US market, a high degree of uncertainty in China, and a slowdown in Europe. 

He noted Sony increased its share of the global smartphone image sensor market to 51%, up from 44% last year. 

In a separate report, data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker showed global smartphone shipments fell 14.6% year over year to 268.6 million units in the first quarter of 2023. This is the seventh consecutive quarter of declines as the market sours due to mounting macroeconomic headwinds, inflation, and sliding demand. 

"The industry is going through a period of inventory clearing and adjustment. Market players remain cautious deploying a conservative approach rather than dumping more stock into channel to chase temporary gains in share. I think is the smart thing to do if we want to avoid an unhealthy situation like 2022.

"While we are optimistic about recovery by the end of the year, we still have a tough 3-6 months ahead. Everyone is anxious about exactly when the tide will turn and wants to be first to ride the wave of recovery. However, it's a tricky situation. Anyone who jumps in too soon will drown in excess inventory. Now more than ever, it's important to keep a close pulse of market. Barring unforeseen elements, IDC expects the market to cross into positive territory in the third quarter and see healthy double-digit growth by the holiday quarter," said Nabila Popal, research director with IDC's Worldwide Tracker team.

Concerns about recession may be pushing demand lower for pricy smartphones and other electronics among consumers.