[News] China’s Lens Market Faces Price Wars, Supplier Reportedly Halts OPPO and Vivo Orders

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According to a report by Economic Daily News, China’s lens manufacturing industry is reeling under intense internal competition, with some lens models reportedly priced lower than a bottle of water. Industry sources cited by Economic Daily News reveal that even Huawei’s subsidiaries could not withstand the pressure and have ceased supplying lenses to smartphone brands like OPPO and Vivo.

The report identifies the Huawei subsidiary in question as Zhonglan Electronics (ZET), the company that made headlines three years ago for acquiring the Chinese Lianyungang plant of Japan’s Kantatsu. Kantatsu was once part of Apple’s iPhone lens supply chain but exited the market in 2021 after selling the plant at Apple’s direction. At the time, major players like Sunny Optical, AAC Technologies, and GSEO had shown interest in the acquisition, but Zhonglan emerged as the unexpected winner, gaining industry prominence.

However, Zhonglan’s success was short-lived. Following the acquisition, Kantatsu exited the iPhone supply chain, with Sunny Optical taking its place. Meanwhile, Zhonglan’s rapid rise has been derailed by global headwinds such as the pandemic, the U.S.-China trade conflict, and weak consumer demand, particularly in the smartphone sector. As of the report’s publication, Zhonglan Electronics has not provided any response.

China’s lens industry has been grappling with severe overcapacity, leading to cutthroat competition. Many second- and third-tier manufacturers have resorted to aggressive price cuts to secure orders, even to the point of incurring losses. The dire state of the industry is epitomized by the saying, “Some lenses cost less than a bottle of water.”

By the end of 2023, as inventory levels normalized, major players like Largan Precision and Sunny Optical raised prices for high-end lenses, such as 5P (five plastic lens) and above, temporarily easing price wars. However, the overall recovery in the smartphone market in 2024 has fallen short of expectations. Despite efforts by Apple and other major brands to launch new models, lens specification upgrades remain modest. For instance, the iPhone 16 series features limited improvements, with the periscope lens extending to flagship models while most lenses retain previous-generation specifications.

The Economic Daily News cites industry sources who noted that in 2021, Largan secured long-term supply agreements (LTA) with brands like Honor, OPPO, Vivo, and Xiaomi through patent litigation, gaining a dominant share of high-end lens orders. These included all orders for 7P and 8P lenses and a 50% share of 6P lenses, solidifying its leadership in the high-end smartphone lens market. This strategy ensured Largan’s pricing power and stable supply volumes in China. Nevertheless, the mid- to low-end market, particularly for 5P and below lenses, remains fiercely competitive. Manufacturers desperate to maintain factory utilization rates have resorted to loss-making pricing strategies.

As reported in the same article, Zhonglan Electronics, facing mounting losses, recently halted lens supplies and released orders for front-facing cameras, 3P/4P lenses, FOD (fingerprint on display) lenses, and IoT lenses. This abrupt decision has compelled OPPO and Vivo to urgently turn to Taiwanese lens manufacturers for support to bridge the gap.

(Photo credit: Zhonglan)