Sales of new phones have dropped in the biggest fall since the invention of the smartphone.
Research firm Strategy Analytics said shipments in February fell by 38% year-on-year.
The outbreak of the coronavirus in China had a huge impact, report author Linda Sui said.
“Some Asian factories were unable to manufacture smartphones, while many consumers were unable or unwilling to visit retail stores and buy new devices,” she said.
The report said that smartphone shipments dropped from 99.2 million in February 2019 to 61.8 million in February 2020.
February was set to be a big month for the phone industry, with its major annual Mobile World Congress showcase, where many new phones are unveiled for the first time.
The event was one of the first major conventions to be cancelled due to coronavirus.
Samsung, which revealed its latest flagship S20 phones in February, has reportedly seen slow initial sales of the devices.
Meanwhile, Apple warned it would miss its profit forecasts and claimed that worldwide iPhone supplies would be “constrained”.
“February 2020 saw the biggest-ever fall in the history of the worldwide smartphone market,” said Neil Mawston, executive director at Strategy Analytics.
“Supply and demand of smartphones plunged in China, slumped across Asia, and slowed in the rest of the world.
“It is a period the smartphone industry will want to forget.”
The research firm said it expected smartphone shipments to continue to struggle throughout the next few months, now that the virus has spread through Europe and into the United States.
Hundreds of millions of potential customers are now in lockdown and unable to head to the shops.
Retailers may decide to offer “generous” discounts on bundles to bolster sales, Strategy Analytics said.
Despite its warning about financial targets being missed and difficulties with iPhone supply, Apple has launched two new products into this uncertain market – a new iPad Pro with laser-scanning technology and a new MacBook Air – although it did so by press release rather than at a high-profile event.
A sign of the times and perhaps an indicator of what might be to come when we emerge into what will inevitably be a very new world, post-COVID-19.