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OPPO and Vivo to Surpass 40% in Production Volume Growth This Year as Competition Intensifies Among Chinese Smartphone Makers, Says TrendForce

The global production volume of smartphones worldwide is expected to peak in the third quarter on account of effects from the peak shipment season, subsidies from Chinese telecom operators and back-to-school sales. This demand surge will also drive the smartphone component markets, and supply will become tight for memory, panels, application processors and other key parts. The latest report from the global market research firm TrendForce finds that Chinese smartphone brands will continue to witness substantial increase in their production volumes through 2016, with their average year-on-year growth rate reaching 11%. Huawei, OPPO and Vivo will be able to maintain strong market performances this year. LeEco, which experienced a rapid rise last year, will post notable production volume growth as well.

Huawei encounters setbacks in sales while LeEco’s smartphone business takes off with its production volume growth rate at above 300% year on year

“The Chinese market is ever-changing,” said Avril Wu, TrendForce smartphone analyst. “Short product lifecycle and fierce competition lead to constant shifts in the production volume ranking for domestic brands. Lenovo and Xiaomi were Chinese smartphone leaders in 2014, and then Huawei became the No. 1 domestic brand 2015 by registering an annual production volume of over 100 million units. This year, however, OPPO and Vivo have taken the spotlight in the home market.”

After becoming the leading Chinese brand by production volume in 2015, Huawei’s performance has started to slack. The sales of the Huawei’s newest flagship, P9, were not as robust as expected during the first half of 2016 even though it features a Leica-certified dual camera as the main selling point. Conversely, OPPO and Vivo’s flagships, which were released around the same time, have been well-received by consumers because of their sleek surface designs and fast-charging capability. The production volumes of both OPPO and Vivo’s flagship smartphones are expected to keep rising through the year. Based on the latest data, TrendForce has lowered this year’ production volume projection for Huawei to 119 million units, though this figure still represents a year-on-year growth rate of 10.2%. OPPO and Vivo’s projections on the other hand have been raised to 78 million and 66 million units, respectively. The year-on-year growth rates of these two brands will also exceed 40%.

The recent and rapid ascendency of another Chinese brand, LeEco, has also caught the attention of the market. Backed by a parent company that is flushed with both cash and video content, LeEco has aggressively expanded into different hardware device markets, from Internet-connected TV sets to smartphones. LeEco’s smartphone production volume just reached 5 million units last year, but this figure is expected to surpass 20 million this year, translating to a year-on-year growth rate of over 300%. Furthermore, LeEco has become the largest shareholder of Coolpad, another compatriot smartphone maker. After the tie-up between the two companies is completed, LeEco devices, which for now are limited to online sales, will become available in Coolpad’s physical retail stores. Looking ahead to 2017, TrendForce forecasts that LeEco will see another huge increase in its annual smartphone production volume.

ASUS’s production volume growth is expected reach 34% year on year whereas HTC will suffer an annual decline of almost 30% 

Looking at Taiwanese smartphone brands, ASUS has made significant strides since it entered the market three years ago with high cost-performance offerings. In order to boost sales, ASUS this year has decided to switch most of its devices’ application processors from Intel’s chips to Qualcomm’s as the latter have better capabilities and emit less heat. ASUS is currently the leader among Taiwanese brands and its production volume for 2016 is projected to hit 21.5 million units, up 34% from the 2015’s figure of 16 million.

The other major Taiwanese electronics brand, HTC, has dramatically shifted its product development focus to VR headsets. However, a survey of its product portfolio suggests that smartphones are still the company’s core business. Due to strong competition from Chinese brands, the production volume of HTC’s latest flagship, the HTC 10, will only be around 1 million units. The Taiwanese brand will take on additional smartphone production in the second half of 2016 as a result of receiving manufacturing contracts for Nexus phones from Google. Nonetheless, its overall production volume for the year will amount to only 13 million units, down 27% from last year’s 18 million. Current analysis indicates that a smartphone maker must achieve the minimum production volume of 40 million units to reach this year’s global top 10 ranking. Hence, it is highly unlikely that HTC will be able to regain its past glory as a major brand in the market.

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