Samsung overtook Apple through a slender 1% lead to secure the top spot in smartphone shipment volumes during the first quarter of 2023, despite the ongoing contraction of the smartphone market, according to a new report.

The South Korean electronics giant shipped a total of 60.6 million units, narrowly surpassing Apple’s 58 million in the quarter ending March, according to research firm Counterpoint. The overall smartphone market saw a year-on-year decline of 14% and a quarter-on-quarter drop of 7%, resulting in a total of 280.2 million shipment units in Q1 2023, the Hong Kong-headquartered firm said in a report.

Concurrently, revenues experienced a 7% year-on-year reduction, reaching a record-low of $104 billion. While Samsung took the lead in shipment volumes, Apple maintained a commanding first quarter in terms of operating profits, securing a substantial 72% lead over Samsung. The iPhone maker also captured half of the market’s revenue, maintaining a 31% advantage over its South Korean competitor, Counterpoint added.

Jeff Fieldhack, a Research Director at Counterpoint, attributed Apple’s resilient performance to the enduring loyalty of its customer base. The company’s thriving ecosystem discourages consumers from seeking out less expensive alternatives, while its strong presence in the refurbished market — accounting for over 50% of the sector — bolsters its performance, he said.

“Apple is able to weather economic and other fluctuations better than its rivals while enjoying unflinching loyalty. This also meant Apple was able to meet the demand for the iPhone 14 series which spilt [sic] over Q4 2022, when it had problems at its Zhengzhou factory, rather than that share dissipating or transferring to rivals,” Fieldhack said.

Counterpoint’s projections align with recent findings from Canalys, another research firm.

Apple officially echoed some of this performance on Thursday, disclosing in the quarterly earnings that it sold $51.3 billion worth of its marquee devices in the quarter ending March.

But the road ahead is likely to remain tough. For a variety of reasons, we might see a few more declining quarters, according to Counterpoint analyst Tarun Pathak.

“The persistent issues affecting the smartphone market are unlikely to abate anytime soon. Moreover, the recent decision by OPEC countries to cut oil production may lead to higher inflation rates, causing a reduction in consumers’ spending power,” he said.

The industry-wide downturn has had a noticeable impact on the financial outcomes of numerous major players in the smartphone market. Samsung Mobile Division’s latest result suggested its revenue was down 2% year-on-year. Meanwhile, Samsung as a company, registered a 95% dip in profit due to sluggish chip demand.

Earlier this week, chipmaker Qualcomm’s shares fell after it disclosed a 17% decline year-on-year across smartphone processor sales.