Tech analyst firm Counterpoint Research said the sector had been experiencing drops in sales since the last quarter of 2017 and this trend was expected to continue for the rest of 2018.
In a statement, the firm said the market had enjoyed a compound annual growth rate of 16% in the five years from 2012 to 2016.
Counterpoint attributed the dropoff to a slowdown in the global economy and fluctuation in exchange rates in emerging markets as in Latin America. The US-China tariff war had not helped either.
Research director Tom Kang said: “Many markets have already hit a saturation point for new smartphone demand and are dependent on replacement demand. However, since last year consumers have decided to trade up whenever they had the chance and are thus going for a better device, despite the price difference.
"This is evident in the introduction of Apple’s iPhone X last year. But buying a more expensive device results in extending the length of replacement cycles, especially when your earnings are limited.”
While lesser new devices were being bought, the higher prices for the new models meant that revenue for the manufacturers was on the rise.
“Overall smartphone revenue may grow 9% compared to last year. This is even higher than the 7% revenue growth of 2017," Kang said.
He said a similar trend could be expected in 2019 with the new Apple iPhone XS Max introduced at a higher price point, Samsung’s foldable smartphone coming soon and 5G smartphones on the horizon.
But again, the average selling prices of smartphones were likely to grow more steeply to offset the low volume growth.
Analyst firm Canalys recently released figures that showed smartphone shipments were down by 7% in the third quarter, while an IDC report said shipments in the same quarter showed a year-on-year decline of 6%.