According to IJIWEI’s report, as the return of Huawei intensifies competition in the Chinese market, Chinese smartphone manufacturers such as OPPO and Transsion are venturing into the Southeast Asian market, a move that is expected to pave the way for sales recovery in the coming year.

In September this year, OPPO hosted a global launch event in Singapore for two high-end foldable smartphones, the Find N3 and N3 Flip.

Elvis Zhou, Chief Marketing Officer for OPPO’s overseas division, stated that the smartphone industry is expected to make a recovery in 2024 and 2025, with foldable smartphones playing a crucial role. While shipment volumes may not be as high, foldable smartphones have been growing at a rate of over 100% annually, and their average selling prices far exceed those of regular smartphones, creating significant value. This is why OPPO is fully committed to foldable phones.

Andy Shi, President of OPPO’s Asia-Pacific region, emphasized Singapore’s significance as a pivotal hub with substantial economic and political influence in the Southeast Asian region. He pointed out that a large number of high-end smartphone users who frequently travel for work are key influencers in this area.

The decision to launch OPPO products in Singapore is aimed at leveraging this advantage for further market development. Despite existing macroeconomic uncertainties, Andy Shi expresses optimism, anticipating moderate growth in the Asia-Pacific region for the upcoming year.

Furthermore, Tecno, a subsidiary of Transsion Holdings that has been known for its long-term focus on entry-level smartphone models in Africa, has recently introduced its latest foldable smartphone in Singapore, marking its debut in the Southeast Asian market.

According to TrendForce’s data, Transsion, along with its subsidiaries Tecno, Infinix, and itel, has not only outperformed Vivo but also claimed the fifth position in the global market during Q2. The company’s growth trajectory is expected to sustain its momentum in Q3.

Regarding the development of the folding phone market, TrendForce has also stated in a previous press release that shipments are poised to surge dramatically to 18.3 million units, marking a 43% year-on-year increase by 2023. Nevertheless, this only constitutes a modest 1.6% of the total smartphone market for the year. Looking ahead to 2024, the growth is expected to continue, with a 38% increase, resulting in a substantial 25.2 million units and pushing the market share to 2.2%.

(Photo credit: Phantom)

In the fourth quarter, Qualcomm reported a year-on-year revenue decline of 24%, amounting to $8.67 billion for the period ending on September 24. Nevertheless, this figure exceeded the market’s projected $8.51 billion. Akash Palkhiwala, CFO of Qualcomm, stated that the smartphone market is showing signs of stabilization, and Qualcomm’s chip sales are on the path to recovery.

CEO Cristiano Amon further elaborated that most smartphone companies have successfully bring up their inventory and are now placing new orders. He expressed, “we are cautiously optimistic as we go forward with that stabilizing and the normalization of Android channel inventory.”

According to reports from China Times, Huawei, once a former client of Qualcomm, has ventured into designing and producing its smartphone chips, thus emerging as a new competitor for Qualcomm. Amon emphasized that he thought Huawei’s return to the market will affect very small to Qualcomm’s relationships with other Chinese smartphone manufacturers. CFO Palkhiwala indicated that sales to Chinese smartphone clients are expected to grow by 35% compared to the previous quarter.

Notably, Qualcomm’s prominent client, Samsung Electronics, continues to rely on Qualcomm chips for the majority of its recent devices. Amon confirmed that Qualcomm will continue to dominate the chips used in Samsung’s upcoming S24 series of smartphones. Financial analyst Logan Purk from Edward Jones highlighted that the resurgence in demand for Android smartphones is closely tied to the significant growth in demand from Chinese OEM manufacturers. This may be a key factor contributing to Qualcomm’s consistent performance and improved outlook for the next quarter.

TrendForce, focusing on the smartphone industry, analyzed that the completion of inventory adjustments by leading process manufacturers is set to stimulate activity for upstream foundries. However, when it comes to the overall recovery of the smartphone market, there are still many uncertainties present, such as ongoing conflicts, the economic revival of major powers, and geopolitical factors. Even though the market has shifted from an extremely pessimistic outlook, there is still no clear signal supporting an optimistic and upward trend. Consequently, a slight growth of approximately 3% over the course of the year is expected.
(Image: Qualcomm)

According to Bloomberg’s report, Taiwanese company Wistron, previously one of Apple’s iPhone assembly suppliers in India, has agreed to sell its 100% stake in Wistron InfoComm Manufacturing (India) Private Ltd. to Tata Group for $125 million on October 27, 2023. Wistron will formally exit Apple’s supply chain, and Tata will become the first local iPhone assembly supplier in India.

TrendForce’s insights:

1. Apple Focuses on Indian Manufacturing as Wistron Exits iPhone Assembly Business

Amid international geopolitical risks, Apple has chosen to diversify its supply chain and production risks by shifting its iPhone assembly business from China to India. Apple’s decision to opt for India is primarily due to the fact that since 2015, India has become the fastest-growing regional market for smartphones globally.

Additionally, in recent years, the Indian government has actively worked to make India an attractive manufacturing and export hub for international companies. With strong government policy support and a vast domestic market, these factors have allured Apple to shift its production base here.

In the past, Wistron, along with Foxconn and Pegatron, was one of the three iPhone manufacturers for Apple in India. However, in 2020, there were reports of a riot at Wistron’s Indian factory, where thousands of Indian employees were dissatisfied with excessive working hours and unpaid wages. They vandalized the factory and even stole iPhones. This incident prompted Apple to initiate an investigation and ultimately led to a temporary suspension of its orders with Wistron.

Additionally, on July 17, 2020, Wistron announced the sale of its iPhone assembly plant located in Kunshan, China, to Luxshare Group. While this factory had an annual revenue that could exceed 100 billion yuan, its net profit margin was only 0.2%.

It can be inferred that the profit margins in the subcontracting business were inherently low, and following the riot incident at its Indian plant, Wistron may have lacked the bargaining leverage with Apple. Therefore, after considering all factors, it decided to sell its iPhone assembly plant in India.

2. Tata Group Takes Over India Manufacturing, But Expectations Are Low for a Significant Increase in Their Share of New iPhone Assembly

Currently, Wistron’s factory in Bengaluru is primarily responsible for assembling orders for the iPhone 14. To qualify for production subsidies from the Indian government, Wistron has committed to producing at least $1.8 billion (USD) worth of iPhones by March 2024.  After this transaction is completed, Tata Group will take over and fulfill this commitment.

Previously, Tata Group’s casing factory produced only one out of every two components that met Apple’s standards, indicating significant room for improvement in its yield rate. By examining the outsourcing production share table below, it is evident that Foxconn has the highest share in Apple’s current new iPhone assembly. Among these four models, only certain models like iPhone15 and iPhone15 plus are produced by Tata Group in India.

This suggests that Apple may be allocating the production of relatively less popular models to Tata Group for testing their yield rates. This decision may be due to the positioning of iPhone and Plus series products, coupled with their comparatively lower sales performance in recent generations. Apple is likely doing this until the production standards of the Indian outsourcing factory can be confirmed to meet 100% compliance.

Consequently, even though Tata Group’s acquisition of Wistron’s subcontracting factory is expected to expand its capacity, its share in new iPhone assembly is unlikely to significantly increase in the short term.

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As reported by Jiwei, Beijing Xuanjie Technology Co., Ltd. has recently been established, and its legal representative is Xuezhong Zeng, who holds the position of Senior Vice President at Xiaomi Corporation. The company has registered capital amounting to 3 billion Yuan and is involved in activities related to IC design services and product sales, among other areas.

This marks the second “Xuanjie Technology” venture within the Xiaomi family. Back in December 2021, Shanghai Xuanjie Technology Co., Ltd. was established, also under the legal representation of Zeng. The company’s scope of operations encompasses technological services in the semiconductor field, integration of information systems, IC design and service related, and product sales. All of these are fully owned by X-Ring Limited.

Xiaomi, alongside OPPO and VIVO, among other Chinese smartphone brands, often find it challenging to independently develop advanced system on a chip (SoC) due to constraints in technical expertise and financial resources. Consequently, their primary focus on developing specialized chips like power management integrated circuits (PMICs) and Image Signal Processor (ISP), based on their collective experience in chip development.

Xiaomi stands out as the sole Chinese brand among these peers, having successfully launched its self-developed SoC in 2017, known as the “Surge S1,” which was integrated into the mid-range Xiaomi 5C. Nevertheless, the Xiaomi 5C fell short of expectations, mainly due to the absence of distinguishing features in the “Surge S1.” Many reviews highlighted subpar real-world performance of Xiaomi phones equipped with the S1 chip.

Subsequently, Xiaomi did not introduce a successor chip. In 2021, they introduced the ISP chip “Surge C1” and the charging chip “Surge P1.” In 2022, they rolled out the PMIC G1, emphasizing its significant potential in enhancing battery health, accurate battery life predictions, and overall smartphone battery performance.

Xiaomi’s President, Weibing Lu, has previously reaffirmed the company’s unwavering commitment to developing in-house chips. They fully acknowledge the long-term and intricate nature of chip development, respect the established development patterns in the industry, and remain prepared for a long-term strategy, all with the ultimate goal of enhancing the competitiveness and user experience of their end products.
(Image: Xiaomi)

According to IJIWEI’s report, industry insiders reveal that Huawei has set a goal of shipping 100 million smartphones next year. This target represents a 40% increase over earlier predictions, as various market research firms had previously estimated Huawei’s smartphone shipments for the next year to be around 70 million units.

Huawei’s aggressive sales plan for the upcoming year is propelled by the favorable reception of its recently launched flagship smartphone series, the Mate 60. By the end of this year, Huawei aims to have shipped approximately 20 million units of the Mate 60 series, contributing to the projected annual smartphone shipments ranging between 40 million and 50 million units. This surpasses the previous year’s shipments of 30 million units by 30 to 70%.

With the growing shipment volumes, the supply of Huawei Mate 60 series smartphones featuring organic light-emitting diode (OLED) panels has also seen an increase recently, with suppliers ramping up their production rates.

The Huawei Mate 60 series has become a much-anticipated success in the consumer electronics market. During the Huawei Autumn Full-Scene New Product Launch event, Huawei’s Terminal BG CEO and Chairman of the Intelligent Automotive Solution BU, Richard Yu, expressed his delight with the positive response to the “Pioneer Program” products.

Huawei is currently working around the clock to meet the surging demand for its products. The “Pioneer Program” includes the Mate 60 Pro, Mate 60 Pro+, and the foldable Mate X5.

Several supply chain sources and analysts have indicated that since earlier this year, Huawei has been steadily increasing its stock of components such as lenses, cameras, printed circuit boards, and various other parts to meet its shipment targets. Huawei has also requested that its sole 4G mobile chip supplier in the U.S., Qualcomm, deliver the full-year orders before June.

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(Photo credit: Flickr)