Immediately after Russia’s invasion of Ukraine, the US and EU launched a few sets of sanctions against Russia. In effect, many top brands (almost all) stop operating in Russia. The latter is not allowed to get any high-tech product. We have also written that Intel, AMD, TSMC, Samsung, and many other component makers will not ship their products to Russia. Of course, all these sanctions have a goal to “bury” Russia’s economy. But will it affect only Russia’s economy? We doubt a lot.
Russian Smartphone Market
As said, many brands (including tech companies) left the Russian market. Apple was among them. On March 1, the Cupertino company announced that it would suspend the sales of Apple products in Russia and limit the function of Apple Pay. In addition, apps from Russia Today and Sputnik have also been removed from the Apple App Store outside of Russia.
But there are always two sides to the coin. We mean these sanctions are not one-sided. At least, they will affect the economies of those countries that launched or supported these sanctions.
Recently, we learned that the entire smartphone market doesn’t perform well in the first half of this year. The main reason lies behind the conflict between Russia and Ukraine. Moreover, many smartphone makers have made adjustments to their forecasts.
No One Knew About The Possible War Between Russia And Ukraine
In early February this year (before the war between Russia and Ukraine), the consulting agency TrendForce estimated that in 2022 the output of smartphones will be about 1.39 billion units. As for the separate brands, Samsung will ship 276 million, Apple 243 million, OPPO 208 million, and VIVO 149 million units.
But the market got earth-shaking changes. And we guess none of these numbers will be reached.
We know that in the smartphone market, the main changes touch the big brands basically. We mean if there are changes in the numbers, they will be within the top 5 only. This also means that if any brand from this list is among those who support sanctions against Russia will suffer a lot.
Not surprisingly, none of the analysts is trying to make assumptions at the moment. The situation in the frontline changes hour by hour. So if anything seems trustworthy for the moment, it will be senseless at the next moment. However, that’s not difficult to guess that the demand will be much lower in comparison to the expectations. The situation will worsen because the number of countries and companies that support sanctions against Russia will raise.
In this regard, Strategy Analytics analyst Woody Oh said that other leading smartphone OEMs are likely to join Apple’s actions in Russia in the next few days. If the current situation persists for a few weeks or months, the Russian smartphone market will suffer a lot. Russia has been one of the top five countries in smartphone shipments in recent years, as well as the top ten countries in smartphone revenue.
According to the analysts, even in this situation, Apple will rank among the top three. But the sold smartphone units will be 34 million only. Generally, the demand for mobile phones in Russia and Ukraine is estimated to be between 40-45 million units a year. So the war between Russia and Ukraine will not bury this market completely.
Chinese Smartphone Brands In Russia
China and Russia have good relations. So it’s a sin to think that China will stop selling smartphones in Russia. According to the Russian mobile phone market shipment report released by Counterpoint Research, the country’s mobile phone market share is basically occupied by mainstream brands such as Samsung, Xiaomi, Apple, and Huawei.
This simply means that 2 out of four are Chinese smartphone brands. Well, Huawei doesn’t launch many smartphones currently. So everything is left on Xiaomi. But we should also point out that Honor and Realme are gaining momentum as well. They are recognizable brands and in the near future, they will become even more popular.
There is every reason to think Samsung is most likely to follow up on Apple’s suspension of sales to Russia. When this happens, Russian customers will be affected hugely. We mean it’s currently the most popular high-end smartphone brand in Russia, with a considerable share. But on the other hand, once this happens, the mentioned Chinese brands will benefit.
The war between Russia and Ukraine has greatly affected the exchange rate and caused inflation issues. So if this continues, the global economy and the entire mobile phone industry will face difficult times.
Will This Last Long?
Some analysts think this war shouldn’t last long. So if the two countries want to recover their economies, they must start from what they are doing. We mean they are good at producing natural gas. Especially for Russia, this is essential. So, not to allow people to be starved, Russia should stop the war and start making goods.
But in the worst case, Strategy Analytics said that the war between Russia and Ukraine will trigger a global energy crisis and a global economic recession. Global smartphone manufacturing and supply chains will also be disrupted on a massive scale. By 2022, the global smartphone market will shrink significantly, affecting suppliers in all regions of the world.