Samsung and Apple have consolidated market share in sales for the second quarter of the year in the Middle East and Africa region even as smartphone shipments dipped 10 percent for the same Q2 period overall.

Macro headwinds have turned the tide with a 7.8% dip year on year and reflecting brands’ enthusiasm, according to a latest research report from Counterpoint’s Market Monitor Service.

The research report by Yang Wang says: “The biggest drag on the market was, unsurprisingly, macro issues. Inflation induced by food and fuel shortages dampened consumer demand while declining domestic currencies against the US dollar reduced the purchasing power of consumers.”

There were also secondary macro factors that impacted the market. For example, some governments imposed food export bans or “non-essential” goods import bans to stem the outflow of foreign currency reserves. Taxes on electronics products were also increased, adding more hurdles to the market’s smooth operation.

The market leader, Samsung, grew YoY from a relatively low base in Q2 2021 when it faced COVID-19 disruptions at its Vietnam production facilities.

The new and revamped Galaxy A-series devices have performed well and were among the best-selling devices during Q2. Samsung’s shipments are expected to grow in H2 with the upcoming launch of its new generation of foldables and as end-of-year sales approach.

Apple’s shipments also grew 2% YoY, largely due to better distribution and product availability in GCC countries. The iPhone 13 series has the best-selling premium devices in the region since its launch.

However, other brands apart from these two took a hit in the numbers. Given the pessimistic global macro sentiment, some brands have restrained activities in the region, according to the report. Brands were under pressure to streamline budgets and activities, which were redirected to more strategic markets and regions.

This meant that incentives to push brand penetration in MEA were scaled back, which in turn forced distributors and resellers to raise prices to defend their margins. These headwinds led to declining shipments for many OEMs.
OPPO, Realme, Vivo and Xiaomi saw steep YoY declines in their Q2 shipments. The OEMs continue to struggle in establishing a foothold in the region, as weak distributor incentives and supply issues have plagued the brands throughout H1 2022.

Furthermore, stiff competition from regional stalwarts Samsung and Transsion Group’s TECNO and Infinix has curtailed market share for the challenger brands. However, the ramping up of local production in Pakistan, specifically for OPPO, vivo and Xiaomi, could help ease supply issues in the region. But it is unlikely to have any substantial effect in 2022.

Despite the underwhelming market performance in the first half of the year, there are some reasons to be cautiously optimistic about the rest of the year.

Though inflation has reached double digits in many countries across MEA, it is not a new phenomenon and most customers have experienced these episodes in the recent past. This has brought them the ability to adapt quickly to the new economic realities. Also, the average selling prices of smartphones are continuing to trend up in the region, suggesting increasing digitization and customers’ need for more sophisticated handsets.

The easing of the global semiconductor shortage, which led to severe product availability issues for MEA in 2021, is also expected to help the market find a stronger footing once the economic issues subside.