The Chinese smartphone market is recovering

Smartphone sales in China rose more than threefold in February from the same month last year, when the Beijing government imposed severe blockades to halt the spread of the new coronavirus. This was shown on Thursday by government data, which signals an encouraging recovery of this market from last year's low, when the pandemic in China peaked. According to the Chinese Academy of Information and Communications (CAICT), a state-sponsored think-tank, sales of smartphones in China in February 2021 jumped to 21.3 million units year-on-year from 6.3 million smartphones in February 2020. To illustrate, in February 2019, 14.9 million smartphones were sold in the world's second largest economy. This year's data signals that smartphone sales have exceeded pre-pandemic levels. Economic activity in China came to a halt earlier last year after the government imposed strict restrictions to prevent the spread of Covid-19. This also affected the sale of smartphones. But China recovered relatively quickly from the pandemic and its industry, along with the wider economy, returned to growth. However, despite the end of the pandemic in China, mobile phone manufacturers are facing a challenge today due to the global shortage of chips. A combination of several factors, including incorrect demand calculations, unexpected factory shutdowns, and tensions between the United States and China, caused several automakers to report chip-related issues by the end of December. Gradually, these problems have spread to other types of chips, including those designed for smartphones. In late February, Xiaomi Vice President Lu Weiping published a brief report on Chinese social networks complaining about an "extreme shortage" of chips and calling the situation "crisis." Xiaomi is one of several Chinese smartphone manufacturers that increased production at the end of last year in anticipation of strong sales, as US sanctions against Huawei Technologies affected its phone production. Analysts consider this increase in production to be one of the factors that contributed to the lack of chips.