Component shortages disrupted production schedules, leading to lower inventory and delayed product availability, which eventually impacted sales to end-users.
"Despite strong consumer demand, smartphone sales declined due to delayed product launches, longer delivery schedule and insufficient inventory at the channel," said Anshul Gupta, senior research director at Gartner.
"Supply constraints impacted the production schedule of basic and utility smartphones much more than premium smartphones," he said in a statement.
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Apple reclaimed the second position in sales to end-users and Xiaomi moved back to the third position in the third quarter. Apple continued to experience strong demand for iPhones led by compelling feature upgrades and an under-penetrated 5G installed base.
Samsung maintained its overall lead in smartphone sales, though its market share declined 1.9 per cent year-over-year.
Even with the overall decline, Samsung experienced growth of its premium smartphones, led by strong demand for revamped foldable smartphones.
The current shortage of components, such as radio frequency and power management integrated circuits, delayed smartphone production globally.
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"This disrupted the supply-demand equilibrium and end-users were burdened with limited choices at point of sale. Sales of premium smartphones continued to grow even though overall smartphone sales declined in the quarter," the report noted.
Vivo registered the highest year-over-year growth (20.9 per cent) among the top five global smartphone vendors in the third quarter.
The company introduced 13 new smartphones in the quarter to try to gain advantage while entering new markets, including Europe and the Middle East, along with the addition of new offline retailers and experience stores to its strategy, the Gartner report mentioned.