Demand for handheld devices will keep growing throughout the next few months, in what analysts describe as a smartphone "supercycle".
Image: Bloomberg / Contributor / Getty ImagesFor smartphone enthusiasts looking forward to getting their hands on a better, faster, shinier version of their current device, there is bad news ahead. Analysts and equipment manufacturers alike are warning that the global shortage of chips is now set to hit the smartphone industry, meaning longer wait times and potentially higher prices.
Even the seemingly unconquerable Apple conceded in the company's last earning calls that growth rates would slow down in the next quarter, partly due to component shortages causing longer lead times, and making it difficult to meet ever-increasing demand for iPhones.
Semiconductors, the components that power most consumer electronics, have been scarce for several months now, hitting industries ranging from car manufacturing to smart banking, and with little end in sight. And with demand for smartphones expected to explode in the next year, the difficulty of securing chips is likely to become a challenge even for tech behemoths like Apple or Samsung.
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But for Wayne Huang, vice president of product operations at sustainable phone manufacturer Fairphone, the current shortage of chips is only the symptom of a deeper underlying problem: the demand for smartphones is simply too high.
"From my perspective, the struggle to access enough components really shows how equipment manufacturers are used to compressed timelines. There is a norm of upgrade cycles, where you're always trying to squeeze your product development in 10 to 12 months," Huang tells ZDNet.
This, in turn, tempts users into replacing their devices frequently, as they find themselves wanting top-notch technology in their pockets.
Case in point: the launch of Apple's 5G-enabled iPhone 12 at the end of last year prompted many loyal customers to upgrade their smartphones. The trend is now spilling over to the rest of the industry: tech analysis firm Gartner has found that global smartphone sales jumped by 26% at the start of 2021 compared to the same time last year, and that demand for handheld devices will keep growing throughout the next few months, in what analysts describe as a smartphone "supercycle".
But this "supercycle" is by no means a first-of-a-kind. In a country like the USA, mobile phones are replaced on average every three years; and it is estimated that one billion devices ship every year across the world.
It isn't surprising, therefore, that smartphone manufacturers are expected to be hit hard when some components are short. And while the current concern is with computer chips, shortages are expected to spread to other components too. Smartphones are also made of metals and materials ranging from gold to arsenic; and according to a recent study by the Royal Society of Chemistry, six of the key elements needed to build mobile phones will run out in the next 100 years.
These numbers only point to the huge resources that the current rate of demand for smartphones requires – as well as their unsustainable environmental footprint. Analysts estimate that the total annual carbon footprint of manufacturing mobile phones is equal to at least the annual carbon emissions of a small country.
Worst still, upgrading typically means discarding older devices, which more often than not end up in landfills. The World Economic Forum (WEF) says that smartphones contribute to approximately 10% of global e-waste – that is, roughly 50 million tons, or to put things into perspective, 300,000 double-decker buses.
As Huang explains, Fairphone's answer to this problem is straightforward: put an end to what the company sees as unnecessary upgrading.
In contrast to its much larger competitors, the Netherlands-based company has made a name for itself with a rather counterintuitive approach to smartphone manufacturing. Instead of introducing new models every year, Fairphone leaves as long as technically possible between the generations of mobile phones that the company produces. Since 2013, when Fairphone's first device was released, only four iterations of the handset have launched.
"The approach we take is that we plan more buffer in our product development cycle," says Huang. "We spend a lot of time in our initial product concept, and we only launch a new product once we have defined what we want to achieve from an impact perspective."
In other words, Fairphone's designers refrain from launching new phones unless there is a good reason to upgrade. The latest Fairphone 3+, for example, has improved cameras specs compared to the Fairphone 3 – which was released in 2019, only because the company's designers had figured out how to achieve a lower environmental footprint compared to the 2016 Fairphone 2.
Driving the company's initiative is the goal of letting users hold on to their devices for as long as possible. This is why Fairphone has a modular approach to smartphone design. Fom the battery to the headphone jack, there are seven key components that make up the phone, which customers can easily replace to make their handset last longer – instead of buying a new device at the first sight of a cracked screen.
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Customers even have the option to upgrade their old phone to new specs: the Fairphone 3+ camera, for instance, is available to buy as a module for €60 ($71), for the more DIY-capable owners to set up themselves on their older phones.
And as a manufacturer that relies on Android updates, Fairphone has committed to work to support software for over five years. Customers who bought a Fairphone 2 in 2016, therefore, were still able to receive an update to Android 9 this year.
Of course, the company is not the only one waving the sustainability flag, and the wider industry did not wait until the global shortage of chips to realize how resource-intensive smartphone manufacturing is.
Many equipment manufacturers have developed recycling programs in an attempt to improve the industry's green credentials, by encouraging users to send their old phones to dedicated recycling centers, or prompting them to trade in their devices for credits towards their next purchases.
Apple has even deployed a robot called Daisy, which disassembles iPhones at speed to separate parts that can be recycled from those destined for the graveyard. The company said in 2018 that its efforts helped divert more than 48,000 metric tons of electronic waste from landfills.
But while recycling programs are key, they are not the best solution to resolve the smartphone industry's growing carbon footprint problem, says Matthew Cockerill, a consultant in strategic design, who previously helped launch Fairphone's first device.
"A lot of the focus at the moment is on recycling, but actually if you hang on to your products for twice as long as you normally do, that halves the amount of inlays," Cockerill tells ZDNet. "More efficient than recycling is making sure that we can keep using parts, instead of throwing our products away and making totally new ones."
Smartphones produce between 85% and 95% of their emissions in the production phase. A recent estimate by right-to-repair advocacy group the Re-start Project recently found that increasing the lifespan of a smartphone by 33% could save annual emissions that are equal to those emitted annually by the entire country of Ireland.
To make the case even more compelling, recycling efforts are nowhere near significant enough compared to the scale of the problem. In 2019, recycling rates across electronics stood at only 17%, meaning that manufacturers are popping many more devices into the world that they are taking in.
Apple's Daisy, for instance, deals with a few million devices every year – not even close to the number of smartphones that ship in the same amount of time.
This is why the mindset has to change, argues Cockerill, to tackling the root of the problem, instead of the consequences. Product designs should include the option to upgrade components with a shorter lifespan, if the rest of the device can hang around for a longer time.
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The idea, however, entails driving consumer demand for new products downwards – a concept that is fundamentally at odds with most business models within the industry, which are based on sustaining demand with frequent upgrade cycles designed to convince consumers to replace their devices.
An even harder challenge, in fact, might be to convince consumers themselves. "It requires us to think about our products as owning them for longer, which is very difficult to do because we all like buying new things," says Cockerill. "Will we become accepting of having a product that will last us for 10 years and still look the same?"
In this scenario, consumers would have to start thinking about their smartphones in the same way that they perceive products that have long ceased to receive regular upgrades – think refrigerators, microwaves or toasters.
The problem is that, for now, most of us still enjoy flashing the latest technology when it comes to handsets. For Fairphone's Huang, it might be some time before that mindset changes – let alone before it convinces consumers to invest a significant amount of money in a device that they won't refresh for a five or more years.
"There is a rise of environmental awareness among consumers, but as a business the challenge is to translate that awareness into a purchasing decision," says Huang. "It is easy to pay €20 for a t-shirt made of sustainable cotton, but here we're talking about €450 for a Fairphone 3.
"This is why we need to make it easier for consumers to make their device more beautiful, so that we can compete in the industrial design, and also in tech specs."
Fairphone is still a small equipment manufacturer that is nowhere near competing against giants like Apple, Samsung or Huawei, but the company is hoping that the current shortage of semiconductors will lead consumers to think about the wider industry's unsustainable practices.
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