Premium Ruling the Day
July 11, 2022 - While total market smartphone sales are roughly flat y/y in 2Q22, there has been a marked shift to premium devices, despite rising inflation and recession worries. In 2Q22, total market low-end (<$400) device sales are down ~10% y/y, while flagship sales are up ~8% y/y. We believe record postpaid promotions with base model flagship AAPL, SAM, and GOOG devices for free with trade have shifted consumers into flagships and increased prepaid to postpaid migration to record highs. With the promotional environment unlikely to slow in 2022 and excess inventory of low-end 4G and 5G devices, we can expect the tier two and tier three low-end OEMs will face an even more difficult 2H22.
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