According to TrendForce, in an effort to meet the market’s stock-up demand in the peak season, total production volume for smartphone brands in 3Q19 is estimated at 375 million units, a 9.2% growth QoQ. The top six positions are Samsung, Huawei, Apple, OPPO, Xiaomi, and Vivo, which accounted for 78% of global market share.
Although the seasonality-driven performance is likely to continue in 4Q19, market demand is expected to weaken in 1Q20 because brands have become more meticulous in inventory control, and because the smartphone market has entered a wait-and-see stage as 5G products emerge. In light of these factors, TrendForce believes that brands will adopt relatively conservative production plans in 4Q19, with total production volume of 370 million units, a slight decline QoQ.
The industry’s yearly performance is impacted by several factors. The China-U.S. tariff disputes and the U.S. ban of Huawei both caused the market to be unstable. Furthermore, owing to the product maturity of smartphones, brand differentiation becomes increasingly difficult, and the replacement demand is weaker than in the past. The overall quarterly performances this year are worse than the same periods from last year. The total production volume of 2019 is projected to be 1.4 billion units, a 4%-5% decrease YoY.
As increased share in the Chinese market strengthened Huawei’s 3Q19 performance, Apple led the pack in terms of quarterly growth thanks to new models
Samsung topped the ranking with a production volume of 78.1 million units in 3Q19, a 4.8% growth YoY. Samsung benefitted from Huawei’s weakened sales in the European and American markets and from the successful launch of its A-series smartphones, which allowed the brand to be competitive in overseas markets, such as Southeast Asia, against Chinese brands, which placed a heavy emphasis on high specifications. However, as the R&D capabilities of cellphone manufacturers improve across the board, the differences between them become less and less apparent. As a result, Samsung is increasingly careful in its overall strategy. Aside from product planning, Samsung started to assign OEM production this year to enhance its cost competitiveness.
Huawei secured the number two spot by producing 67.5 million units in 3Q19, a 13.4% growth QoQ, owing to its increased share in the Chinese domestic market. In the overseas market, the company was able to stabilize its sales figures after the U.S.-imposed ban was announced in May. Huawei is yet to be removed from the Entity List in 4Q19, which will pose great difficulties for its overseas expansion with new phones. Fortunately for Huawei, the ban does not affect sales of old models released before May, so they are expected to continue to contribute to sales. Huawei’s 4Q19 production volume is projected to reach nearly 55 million units, while China-U.S. relations remain the largest variable affecting Huawei’s future performance.
Apple remained in the third place and shook off disappointments from a weak 2Q19 by recording a production volume of 46.7 million units in 3Q19, a 42% growth QoQ (the highest among all smartphone manufacturers). The company made several strategic breakthroughs with its iPhone 11 series, including a new pricing scheme for the non-American market and new trade-in policies. On the technical side, the iPhone 11 series featured new colors, triple camera, better photo quality, and longer battery life, all of which drove up global sales. Thanks to the continued popularities of its new phones, Apple’s production volume is projected to peak at about 69 million units in 4Q19, with the iPhone 11 series accounting for 77% of this figure.
OPPO, Vivo, and Xiaomi strive to maintain domestic presence while expanding overseas
As in the previous quarter, the fourth to sixth places are occupied by OPPO, Xiaomi, and Vivo, respectively. These brands’ shares in the Chinese market have been compressed by Huawei, while confronting a hypercompetitive overseas market. As a result, the three brands shared the common goal of maintaining their domestic market share while making breakthroughs in their stagnant overseas development.
OPPO Group (including OPPO, Realme, and OnePlus), aided by the rising 3Q19 demand in the Southeastern Asian market, registered a production volume of 39.2 million units, a 23% growth YoY. In addition to OPPO-branded phones, Realme and OnePlus both benefitted from their online sales focus and recently notched increased market shares.
Fifth-place Xiaomi benefitted from the arrival of peak season and reached total production volume of 32.5 million units, a 5.5% growth QoQ, with its primary markets being China, India, and other overseas regions. Recently, Xiaomi has been investing in new innovations such as better camera performance, 5G, and under-display fingerprint performance, transforming its long-established brand identity of affordable phones in the process. Xiaomi will place heavy emphasis on the development of its flagship Mi series, highly cost-effective Redmi series, and the cooperation smartphones with Meitu.
Sixth-place Vivo has been focusing its latest efforts on integrating new technology such as 5G, enhanced image quality, and extremely narrow bezels, in addition to bolstering its entire lineup across all price points. Since up to 70% of Vivo sales originated from the Chinese market, the increase in seasonality-induced shipment was not especially noticeable, owing to Huawei’s increasing dominance in the domestic market. Vivo’s total production volume in 3Q19 maintained its 2Q19 levels, at 28 million units.
Chinese Brands Will Occupy about 60% of the Emerging 5G Smartphone Market in 2020
The mass release of 5G phones seems imminent in 2020. As the Chinese government actively pushes for 5G commercialization, Chinese brands will occupy significant portions of the 5G smartphone market. In the 2020 global smartphone market, 5G smartphones are expected to have a 15% penetration rate, with Chinese-branded phones taking up approximately 60% of the 5G market.