Murata Manufacturing, the company that makes parts for the iPhone, believes the decline in smartphone sales will continue into 2023. The company estimates that in 2021, shipments of 1.36 billion units will make up the global smartphone market. However, total sales for calendar year 2022 are likely to be less than 1.2 billion units, mainly due to lower demand in the Chinese market.

Murata had thought that demand for smartphones in China would rebound after the COVID-19 lockdowns in major cities gradually ended. But instead, consumers haven't increased their spending, except on high-end models like the iPhone 14 Pro and iPhone 14 Pro Max.

"If the economy is better, consumers may be willing to buy a new phone, even if it's a small upgrade," Murata President Norio Nakajima said in an interview. "What I'm afraid will happen is further commoditization of smartphones and people will wait longer before upgrading."

Murata has a first-hand look at the current state of smartphone decline. The Japan-based company supplies vital components not only to Apple, Samsung, but almost every other smartphone assembler in China. Its shares have fallen more than 20% as its customers face a drop in shipments.

Despite falling consumer demand, Apple still takes 80% of all profits in the industry. The company's revenue rose 3% year-over-year, with smartphone shipments accounting for 16%, ranking second.

Overall, in the second fiscal quarter of 2022, global smartphone revenue fell 2% year over year and 15% quarter-to-quarter, with a market value of $95.8 billion. During the same time period, however, global handset makers' profits rose 6% year over year to $13.1 billion, suggesting that high-end phones -- basically every phone Apple sells -- have at least maintained their sales pace.

Analysts at Morgan Stanley remain hopeful for Apple, believing it will beat Wall Street's expectations for the September quarter, even as it lowered its price target on AAPL. The investment bank forecasts that 51.1 million iPhones were shipped in the September quarter, with an average selling price of $838, which could bring in $43 billion in iPhone revenue.

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