Indonesia’s Smartphone Market Shows Signs of Stabilization Amid 5G Challenges

Indonesia’s smartphone market witnessed a glimmer of hope in the second quarter of 2023, with a 13.8 percent quarter-over-quarter (QoQ) growth, totaling 8.9 million units. However, this marked the eighth consecutive quarter of decline, according to the International Data Corporation’s (IDC) Worldwide Quarterly Mobile Phone Tracker.
Q2 2023 Indonesia smartphone maket IDCLeading the pack in the Indonesian smartphone market were Samsung, with 1.9 million shipments, followed closely by Oppo (1.6 million), Vivo (1.5 million), Xiaomi (1.3 million), and Transsion (1.2 million).

The growth was largely driven by the entry-level smartphone segment, which helped narrow the year-over-year (YoY) decline to a single-digit figure. Most key players increased their shipments in this space, contributing to the recovery. As a result, the 4G smartphone market share rebounded to 86 percent, up from 82 percent in the previous quarter. However, 5G smartphones experienced a 4.3 percent YoY decline for the first time since their introduction in 2020.

Higher-priced smartphones in the >US$600 segment saw remarkable growth, surging 71 percent YoY. Samsung and Apple engaged in fierce competition in this premium category.

Despite the potential of 5G technology, its adoption has been sluggish in Indonesia. Challenges on both the demand and supply sides have hindered its growth.

“5G phone adoption has been slow due to challenges on both the demand and supply sides. 5G smartphone share is still very small compared to 4G smartphones. While it has become more affordable, their 4G counterparts often have much better specs with similar prices,” Vanessa Aurelia, Associate Market Analyst at IDC Indonesia, noted.

“As 5G connectivity is still limited to only certain areas, 5G as a feature doesn’t provide enough enticement for potential new consumers. The low penetration rate of 5G smartphones caused telcos to stay careful in their 5G investments, considering factors like cost and overall rate of return.”

IDC anticipates that the smartphone market in Indonesia has bottomed out and expects consumer demand and supply across various price segments to stabilize. Vendors are gearing up for increased sales during the year-end holiday season. However, it is worth noting that full-year 2023 smartphone shipments are projected to be the lowest since 2018.

As Indonesia navigates the challenges in the smartphone market, industry players are closely watching how 5G adoption and other market dynamics will shape the future of the country’s mobile technology landscape.