According to TrendForce research, since reaching a peak of 1.457 billion units in 2017, it has been difficult for smartphones to significantly increase their penetration rate. In addition, mobile phone hardware updates have slowed which has lengthened the consumer replacement cycle. Add to this the negative effects of the COVID-19 pandemic and growth in overall smartphone shipment volume has become increasingly difficult to achieve. However, based on the premise that the pandemic is slowing down, coupled with the strategy of certain brands actively exploring emerging markets, growth momentum in the global smartphone market has gradually gotten back on track in 2021, with shipments reaching 1.333 billion units, or 6.4% growth YoY. This upward trend is expected to continue in 2022, with shipments expected to reach 1.386 billion, or 4% growth YoY.

TrendForce emphasizes, it should be noted that the status of the pandemic is still the biggest concern affecting the smartphone market this year and this applies doubly to the production capacity of semiconductors. The current problem of material shortages has yet to be alleviated and RF chips, OLED DDICs, and PMICs continue to be in short supply. In addition, issues such as China’s rolling blackouts, spiking shipping costs, and rising chip costs, will cause smartphone brands to face price pressures and it remains to be seen whether higher prices will be acceptable to consumers.

Judging from the 2022 brand market share forecast, Samsung will remain number one followed by Apple, Xiaomi, OPPO, VIVO, and Transsion. Among these companies, Xiaomi is the brand with the fastest-growing annual shipment growth rate. In addition to stimulating sales in the Chinese market through the strategy of expanding brick and mortar stores, Xiaomi’s sales occur mostly overseas, and it is first in market share in India and Russia. In the future, it will continue to explore the Middle East, Latin America, Southeast Asia, and Africa markets.

Four keys to mobile phone trends in 2022

Folding phones, 5G, self-developed chips, and a reduction in the number of rear-facing cameras are the four keys to focus on this year. In terms of 5G mobile phones, the global penetration rate in 2021 was 37%, this is expected to rise to 47% in 2022, and may exceed 50% by 2023. At present, China is the most active country in promoting 5G models. More than 80% of the country’s shipments are 5G mobile phones. Therefore, the key to increasing the global penetration rate of 5G mobile phones in the future is focusing on regions outside China.

Regarding self-developed chips, in the past, only Samsung, Apple, and Huawei were capable of self-developing chips. However, Google launched its self-developed Tensor processor in 2021, and Xiaomi, OPPO, and VIVO have each launched professional imaging chips in succession.

（Image credit: Apple）

In recent years, the biggest trend of smartphone camera modules is the increasing number of rear camera modules, according to TrendForce’s investigations. According to TrendForce research, triple camera modules surpassed dual camera modules to become mainstream in 2020 and drove the continued growth of smartphone camera module shipments. Annual smartphone camera module shipments in 2022 are expected to reach 4.92 billion units, or 2% growth YoY.

However, the trend towards multiple cameras started to shift in 2H21 after a few years of positive growth. The previous spike in the penetration rate of four camera modules was primarily incited by mid-range smart phone models in 2H20 when mobile phone brands sought to market their products through promoting more and more cameras. However, as consumers realized that the macro and depth camera usually featured on the third and fourth cameras were used less frequently and improvements in overall photo quality limited, the demand for four camera modules gradually subsided and mobile phone brands returned to fulfilling the actual needs of consumers. In addition, increases in the pricing of semiconductor chips such as PMICs and Driver ICs, as well as increased shipping costs, have driven the cost of mobile phones up sharply. Without the ability to effectively pass this cost onto consumers, any remaining allowance to economically install low-end cameras has been effectively eliminated.

Camera resolution upgrades: fastest growing market share encompasses 49-64 million pixel cameras

Although camera shipment growth has slowed, camera resolution continues to improve. Taking primary cameras as an example, the current mainstream design is 13-48 million pixels, accounting for more than 50% of cameras in 2021. In second place are products featuring 49-64 million pixels which accounted for more than 20% of cameras last year with penetration rate expected to increase to 23% in 2022. The third highest portion is 12 million pixel products, currently dominated by the iPhone and Samsung’s flagship series. However, a 48 million pixel primary camera is expected to be introduced to the iPhone 14 Pro series (tentative name) that Apple will release this year, further reducing 12 million pixel products to a 15% share in 2022.

In addition to the original Samsung and Xiaomi brands employing 108 million pixels cameras, Vivo and Honor also introduced similar resolution cameras in 2021. There is a chance 200 million pixel products will be ready for commercial use in 2022, driving the penetration rate of ultra-high pixel products to an expected level in excess of 5% in 2022. However, such ultra-high pixel products primarily focus on enlarging photographs without losing image quality. Therefore, TrendForce believes that any marginal benefits these products bring to consumers will gradually decrease and the penetration rate will not grow as quickly as 49-64 million pixels products.

Overall, TrendForce believes that the number of camera modules mounted on smartphones will no longer be the main focus of mobile phone brands, as focus will return to the real needs of consumers. Therefore, triple camera modules will remain the mainstream design for the next 2~3 years.

In recent years, the biggest trend of smartphone camera modules is the increasing number of rear camera modules, according to TrendForce’s investigations. According to TrendForce research, triple camera modules surpassed dual camera modules to become mainstream in 2020 and drove the continued growth of smartphone camera module shipments. Annual smartphone camera module shipments in 2022 are expected to reach 4.92 billion units, or 2% growth YoY.

However, the trend towards multiple cameras started to shift in 2H21 after a few years of positive growth. The previous spike in the penetration rate of four camera modules was primarily incited by mid-range smart phone models in 2H20 when mobile phone brands sought to market their products through promoting more and more cameras. However, as consumers realized that the macro and depth camera usually featured on the third and fourth cameras were used less frequently and improvements in overall photo quality limited, the demand for four camera modules gradually subsided and mobile phone brands returned to fulfilling the actual needs of consumers. In addition, increases in the pricing of semiconductor chips such as PMICs and Driver ICs, as well as increased shipping costs, have driven the cost of mobile phones up sharply. Without the ability to effectively pass this cost onto consumers, any remaining allowance to economically install low-end cameras has been effectively eliminated.

Camera resolution upgrades: fastest growing market share encompasses 49-64 million pixel cameras

Although camera shipment growth has slowed, camera resolution continues to improve. Taking primary cameras as an example, the current mainstream design is 13-48 million pixels, accounting for more than 50% of cameras in 2021. In second place are products featuring 49-64 million pixels which accounted for more than 20% of cameras last year with penetration rate expected to increase to 23% in 2022. The third highest portion is 12 million pixel products, currently dominated by the iPhone and Samsung’s flagship series. However, a 48 million pixel primary camera is expected to be introduced to the iPhone 14 Pro series (tentative name) that Apple will release this year, further reducing 12 million pixel products to a 15% share in 2022.

In addition to the original Samsung and Xiaomi brands employing 108 million pixels cameras, Vivo and Honor also introduced similar resolution cameras in 2021. There is a chance 200 million pixel products will be ready for commercial use in 2022, driving the penetration rate of ultra-high pixel products to an expected level in excess of 5% in 2022. However, such ultra-high pixel products primarily focus on enlarging photographs without losing image quality. Therefore, TrendForce believes that any marginal benefits these products bring to consumers will gradually decrease and the penetration rate will not grow as quickly as 49-64 million pixels products.

Overall, TrendForce believes that the number of camera modules mounted on smartphones will no longer be the main focus of mobile phone brands, as focus will return to the real needs of consumers. Therefore, triple camera modules will remain the mainstream design for the next 2~3 years.

For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insider.trendforce.com/

Smartphones are essential to people’s daily lives and constitute a basic necessity. TrendForce therefore expects the smartphone industry to rebound and post marginal growth next year, assuming that economic activities worldwide will mostly return to normal by then. The main trend drivers in the smartphone market next year are still going to be the usual device replacement cycle and the additional demand from emerging markets. TrendForce expects annual smartphone production for 2022 to reach about 1.39 billion units and the YoY growth rate hitting 3.8%.

Expanding market share will be very challenging for smartphone brands due to fierce competition

Samsung’s smartphone production for 2022 is expected to reach 276 million units, a 1.1% YoY growth. The company continues to reorganize and extend its product series. The integration of the Galaxy Note series with the Foldable series, the continuation of the S-Pen, etc. are some of the moves that Samsung has taken to maintain its market share in the high-end segment. Moreover, Samsung has increased the outsourcing portion of its device manufacturing in order to make its mid-range and low-end models more cost competitive. However, advances in device design and manufacturing will only intensify the competition in developed markets. In the emerging markets, demand will continue to concentrate on entry-level models. Hence, Samsung will have increasing difficulty in growing its market share as most of its offering do not target the demand for entry-level products. This also means that retaining market share will become more challenging for the brand.

Apple is set to release the latest model in its iPhone SE lineup (i.e., the third-generation SE), featuring a 4.7-inch display, A15 SoC, and 5G support, by the end of 1Q22. Other than these features, the rest of the new SE’s hardware specifications will be similar to those of the second-gen SE. In this regard, the new SE can be seen as an invaluable asset with which Apple attempts to enter the mid-range 5G smartphone segment. In 2H22, the company will keep to its tradition of announcing four new models, two of which will feature a 6.1-inch display, while the other two will feature a 6.7-inch display. Although the release of these five new handsets will likely help Apple increase its market share next year, this increase will be constrained by the fact that Apple will have to raise the retail price of its smartphones in order to keep up with rising component prices and ensure some profitability. TrendForce therefore expects Apple’s smartphone production for 2022 to reach 243 million units, representing a 5.4% YoY growth and the second highest volume among all smartphone brands.

Given that demand will unlikely increase by a significant margin in the domestic Chinese smartphone market next year, the three major Chinese brands, including OPPO, Xiaomi, and Vivo, will primarily depend on overseas sales for their smartphone market share growths. It should be pointed out that TrendForce’s calculation of Xiaomi’s production volume also includes handsets released by the brand’s subsidiaries Mi, Redmi, POCO, and Black Shark. Thanks to Xiaomi’s relatively early expansion in the overseas markets, as the global spread of the COVID-19 pandemic is gradually brought under control, Xiaomi is expected to benefit the growth of its overseas sales and register a smartphone production of 220 million units, representing a 15.8% YoY growth and the third highest volume among all brands.

Fourth-ranked OPPO sells its smartphones globally under three brands: OPPO, Realme, and OnePlus. TrendForce expects OPPO group’s annual smartphone production for 2022 to reach 208 million units, a 2.5% YoY growth. Regarding product planning, OPPO is relatively similar compared with Xiaomi, as both of these brands differentiate between various markets and client bases through subsidiaries. Likewise, OPPO has in recent years actively expanded its peripheral ecosystem businesses, such as software services and additional consumer items, in order to improve its profitability for the year. Finally, Vivo will take the fifth rank next year by producing almost 150 million handsets, a 6.4% YoY growth. This brand depends heavily on its customers’ cyclical replacement demand for its sales. Therefore, while the Chinese smartphone market, which is Vivo’s primary sales region, becomes increasingly saturated, the brand’s room for growth next year will also be relatively limited. In addition, as HONOR will also aggressively look to capture market shares in China, the production volumes of OPPO and Vivo will be further constrained next year.

Annual 5G smartphone production for 2022 is expected to reach about 660 million units despite slowing growth rate

Thanks to the Chinese government’s active push for 5G commercialization for the past two years, the global market share of 5G smartphones will likely hit 37.4% in 2021, with about 500 million units produced throughout the year. Going forward, now that the market share of 5G smartphones has surpassed 80% in China, the smartphone industry will shift its focus of 5G development to other regional markets. However, because countries vary in the progress of 5G infrastructure build-out, and 5G service plan fees are higher than 4G fees, the growth of 5G market share now appears to be slowing. As such, TrendForce expects 5G smartphone production for 2022 to reach about 660 million units, translating to a market share of 47.5% for 5G handsets in the overall smartphone market.

On the other hand, the growing market share of 5G smartphones also generates a corresponding growing demand for components. Given the increased shipment in servers, IoT devices, and EVs, foundries will find it even harder to manufacture enough components for 5G handsets since foundry capacities are already stretched to their limits. What this also means is that the market share of smartphone brands will depend on how successful they are in booking foundry capacities. Smartphone brands’ scramble for foundry capacities, however, may in turn result in overbookings or uneven allocation of capacities to components, thereby further exacerbating the mismatched availability of smartphone components. Hence, if the actual demand from smartphone buyers falls short of expectations, TrendForce believes that smartphone brands may be forced to adjust their inventories once again in 2H22.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Smartphone shipments in the Chinese market have seen continued declines in recent years primarily because the penetration rate of smartphones in China has already surpassed 60%. Furthermore, smartphone hardware refreshes have gradually slowed down, with no killer app has emerged yet. Taken together, these factors have led to a decline in consumers’ replacement demand. While the COVID-19 pandemic began its spread last year, annual shipment of smartphones in the Chinese market for 2020 reached only about 330 million units, a 13.61% YoY decline.

Regarding the Chinese smartphone market in 2021, quarterly shipment underwent more than a 100% YoY increase for only the first quarter of the year due to the relatively low base for comparison in 1Q20. Starting from 2Q21, smartphone shipments saw YoY declines for each quarter of 2021. TrendForce, therefore, forecasts 345 million units in annual shipment for 2021 in the Chinese smartphone market, which represents a 4.55% YoY growth and a figure that falls below prior expectations. This disappointing performance can primarily be attributed to the shortage of components from the supply side, along with continued sluggishness from the demand side domestically.

As Honor confirmed its handsets will feature GMS (Google Mobile Services), Chinese smartphone brands look to dominate the overseas markets

Honor recently announced on its official Twitter account that it once again restored its partnership with Google and other suppliers. The Honor 50 series of handsets are equipped with GMS, which includes Google Play Store, Gmail, and YouTube, among other apps.

As a subsidiary of Huawei, Honor was previously unable to install GMS on its phones due to Huawei’s inclusion on the US Entity List, leading to a continued drop in Honor’s overseas market share. Now that it has been spun off from Huawei, Honor needs to restart negotiations with its suppliers. Initially, the company had a hard time expanding its presence overseas due to the lack of GMS functionality as well as the fact that it had to re-establish its global sales networks. After having received GMS authorization from Google, Honor is now able to compete with other Chinese brands such as Xiaomi, OPPO, and Vivo on an equal footing.

Shipping more than 10% of the domestic monthly total in smartphones, Honor has recently established a steady presence in the Chinese market. However, given the domestic market’s bearish trend in recent years, Honor, whose handsets now feature GMS functionality, will likely turn its focus to the European or Southeast Asian markets that Huawei once aggressively pursued.

（Image credit: Pixabay）