Global Smartphone Production Volume May Decline in 2019: Report

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The same report by TrendForce claims that lack of breakthrough features is making consumers less interested in replacing their smartphones

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Global smartphone production volume for 2019 is expected to be 1.41 billion units, a decrease of 3.3 per cent compared with 2018, according to a latest report by TrendForce. Brands would record lower production volumes this year because the overall demand outlook in the global smartphone market remains weak.

The lack of breakthrough features or specs has made the consumers less active than before with respect to replacing their existing devices. If the demand outlook becomes worse, together with uncertainties and impacts from the U.S.-China trade war, the decline in global smartphone production may reach 5 per cent in 2019.

Report predicts Samsung to remain the market leader

TrendForce notes that Samsung produced 293 million smartphones in 2018, a YoY decline of 8 per cent. Its market share has been shrinking as well. However the report predicts Samsung as a brand expected to remain the leading smartphone maker worldwide with a global market share of 20 per cent.

The report reads, “While Chinese brands actively explore lower end and emerging overseas markets, it is relatively difficult for Samsung to develop new business fields, because it has already had a complete deployment in the low, middle and high-end segments. Moreover, Samsung has involved in fierce price competition with China’s domestic brands, so it would adopt more aggressive strategies this year in terms of specifications and pricing to compete with its Chinese rivals.”

Huawei may become the second largest smartphone brand

Taking advantage of a comprehensive product range and self-developed chips, Huawei’s production volume increased by 30 per cent YoY to 205 million units in 2018. With its P series and Mate series smartphones, Huawei has also been able to expand its share in the premium segment of the Chinese smartphone market, where Apple used to dominate. Huawei has also successfully presented its brand in overseas markets like East Europe.

Looking ahead to 2019, Huawei would retain its position in the Chinese smartphone market, while focusing on the expansion in emerging markets such as Eastern Europe, Brazil, and South America. According to TrendForce, Huawei has a chance to produce 225 million smartphones in 2018, with a global market share of 16 per cent, overtaking Apple to become the world’s second largest smartphone brand. However, as China’s largest mobile phone brand, Huawei may be more vulnerable to the looming U.S.-China trade war. So it remains to be seen whether the company’s smartphone production and shipment would be affected.

Prediction for Apple in 2019

As for Apple’s performance in 2018, its total production volume for 1H18 was roughly the same as for 1H17. However, the sales of new iPhones turned out to fall short of expectation, resulting in lower shipments of iPhones in 2H18, about 7 per cent less than in 2H17. As a result, the production volume of Apple in 2018 declined by 3 per cent YoY. Apple’s shipment in the Chinese market last year was 10 million units less than in 2017, due to the ban on the sale of some iPhone models and the high pricing of the new iPhones.

Going forward to 2019, Apple will continue to face the longer replacement cycle of smartphones and its weakening sales in the premium segment of the Chinese market. Furthermore, it is also a challenge for the brand to balance the profitability and pricing strategies to boost sales. As a result, Apple’s production volume for 2019 would decrease to 189 million units, with 13 per cent market share, down from 15 per cent in 2018. If the tension in US-China trade becomes worse this year, Apple’s production volume may decline further.

The case of Xiaomi, OPPO, and Vivo

Xiaomi, OPPO, and Vivo would retain the fourth, fifth and sixth position respectively in the global smartphone brand ranking for 2019, the same as 2018. Xiaomi maintains the strategy of low gross margin, building an ecosystem with cost-effective products and services. It registered 123 million units in smartphone production for 2018, 32 per cent more than that for 2017. For 2019, Xiaomi would continue to focus on research and development, aiming to renew its brand image with more advanced technology, especially with new positioning for its sub-brands including Xiaomi, Redmi, Blackshark, POCO, and cooperation with Meitu. In terms of overseas business, Xiaomi would continue to strengthen its competitiveness in European and Indian channel markets. Xiaomi’s smartphone production for 2019 is expected to be 129 million units, says TrendForce.

OPPO and Vivo, ranking the fifth and sixth, have turned to explore overseas business opportunities due to the saturation of the Chinese smartphone market. OPPO has launched Realme, an online brand, in Indian market; Vivo has signed a six-year sponsorship agreement with FIFA World Cup to enhance its international popularity. However, for OPPO and Vivo, about 70 per cent of their revenues are still generated from the Chinese market. So the looming outlook of China’s economic situation in 2019 would have relatively great impacts on the two brands.

In terms of their respective performances, OPPO registered a production volume of 120 million in 2018, and aims to keep the volume flat in 2019, with an estimated market share of 8 per cent. In contrast, Vivo, whose overseas business contributes less to its total sales, produced a total of 104 million smartphones in 2018. In 2019, the volume would fall to less than 100 million, which represents a global market share of 7 per cent.

TrendForce noted that a number of Chinese smartphone brands have closed down or been acquired in 2018. Amid the demise of these smaller brands, the major brands in the smartphone industry have continued to expand. Throughout 2019, smartphone brands would be struggling more to differentiate their new products, and the gaps between market shares of the world’s top six smartphone makers would be smaller. As the looming U.S.-China trade war brings more uncertainties, it remains to be seen whether the landscape in the global smartphone market will undergo more changes.

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