Smartphone sales are collapsing in China. They could plunge 40% in Q1

China’s smartphone market, the biggest in the world, is set for a massive plunge due to the novel coronavirus outbreak.

Smartphone shipments in China will likely fall 40% in the first quarter of 2020 compared with the same period last year, according to a new report from research firm IDC.

That means Chinese consumers will buy 33 million fewer phones in the first three months of the year, according to Will Wong, an analyst with IDC.

When IDC updated its forecast last year, “we were only expecting a 5% drop” in the first quarter of 2020, Wong said.

“Even with a potential March recovery it will still be difficult to reach last year’s levels” for the first quarter, he added.

There will also be knock-on effects for global smartphone shipments, which IDC forecasts will decline 10.6% in the first half of 2020, compared to the same period last year.

Business in China ground to a halt when the outbreak accelerated late last month. Companies have been struggling to return to normal, as hundreds of millions of people in China remain under travel restrictions.

“Component shortages, factory shutdowns, quarantine mandates, logistics, and travel restrictions will create hindrances for smartphone vendors to produce handsets and roll out new devices,” IDC analyst Sangeetika Srivastava said in a press release.

Sales should “stabilize” later in the year as 5G smartphones roll out, provided the outbreak subsides, Srivastava added.

Apple warned investors this month that the coronavirus outbreak is hurting its business more than previously expected by limiting how many devices it can make and sell in China.

In an investor update, Apple said it no longer expects to meet the revenue guidance it provided last month for the upcoming March quarter.

“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company said.

Huawei will also likely be hit hard. The Chinese tech company is the top selling smartphone brand in China, with just over 38% market share last year, according to IDC.

A Huawei spokesperson declined to comment, saying the company does not speculate on market performance.