Smartphone brands hoped that the promotional activities related to the year-end holiday season or initiated by e-commerce companies would lead to a significant reduction in channel inventory near the end of 2022. However, the recent downturn of the global economy continued to impact consumer confidence in 4Q22, so smartphone sales were lower than expected and thereby dragged down the speed of inventory consumption. Moreover, the labor shortage problem at Foxconn's electronics assembly base in the Chinese city of Zhengzhou affected Apple's efforts to raise iPhone production in 4Q22. According to TrendForce's latest research, quarterly global smartphone production totaled around 301 million for 4Q22, reflecting a QoQ growth of 4% and a YoY decline of 15.5%.

Earlier in 1H22, China's enforcement of its zero-COVID policy and the Russia-Ukraine military conflict caused the demand for consumer electronics to plunge. Later in 2H22, the global economy experienced a decline that was worse than expected as factors such as high inflation, food shortages, and rising energy prices came into play. As a result, consumer demand was further weakened. Besides these negative factors, the high level of channel inventory was also a major reason as to why smartphone brands suffered a drop in annual device production. Based on TrendForce's calculation, annual global smartphone production fell by 10.6% YoY to 1.192 billion units for 2022. This YoY decline was larger than one recorded for the year when the COVID-19 pandemic first emerged.