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）

Apple is set to unveil the successors to its current device lineups at this year’s fall product launch on September 14. Please see below for some of TrendForce‘s latest data pertaining to the global consumer electronics market:

1. Although the tight supply of certain components due to complications resulting from the COVID-19 pandemic remains Apple’s primary production-related challenge, iPhone production will unlikely be drastically affected. Total iPhone production for 2021 is expected to reach 229.5 million units, a 15.6% YoY increase, with the upcoming iPhone 13 models accounting for about 37%-39% of Apple’s annual iPhone production. In addition, iPhones are also expected to account for about 77% of total annual production of 5G smartphones in 2021, making them the market leader in this segment and representing a drastic increase from 39% in 2020.
2. Regarding technical specifications, the Pro model of iPhone 13 is expected to include 1TB storage capacity as an optional upgrade. Other improvements over previous models include the adoption of A15 processors manufactured with TSMC’s 5nm+ process technology. All four iPhone 13 models will feature flexible AMOLED + On-cell designs for their display panels, while the Pro series will also feature a 120Hz refresh rate as well as LTPO technology for reduced power consumption. Furthermore, all four models’ primary cameras will be equipped with sensor shift image stabilization. The Pro model, in particular, will have its ultra-wide camera upgraded to a 6P lens, with the addition of autofocus capability as well. Much like the iPhone 12, LiDAR functionality is available only for the Pro model of the iPhone 13 lineup.
3. In view of the lackluster sales performances of the iPhone 12 mini, which reached EOL ahead of time, the iPhone 13 mini is expected to account for less than 10% of total iPhone 13 production, since Apple will focus its sales efforts on the other three models. TrendForce indicates that the global economy, markets, and personal incomes are all still experiencing the effects of the COVID-19 pandemic, which has also led to price hikes for electronic components and transportation services, thereby compounding Apple’s difficulties in setting retail prices for the new iPhone models. TrendForce expects Apple to continue the aggressive pricing strategy that it adopted for last year’s models in order to attract smartphone buyers, raise its revenue from services via increased handset sales, and make up for the aggressive prices via increased service revenue.

（Cover image source: Apple official website）

The recent surges of COVID-19 cases in India, Vietnam, and other Southeast Asian countries have adversely affected the global smartphone market in terms of production and demand, according to TrendForce’s latest investigations. The global smartphone production for 2Q21 fell by 11% QoQ to a total of 307 million units. However, a YoY comparison shows an increase of around 10% for the quarter. The global production for 1H21 came to a total of 652 million units, translating to a growth rate of almost 18% compared with 1H20, when the pandemic was in the initial phase.

While fourth-ranked Apple undergoes a transition period between old and new models, and Samsung experiences a slight dip in market share, smartphone brands have improved their respective product specifications

Samsung’s smartphone production for 2Q21 reached 58.5 million units, which was the highest among all smartphone brands yet represented a 23.5% QoQ decrease. Since India and Vietnam account for the majority of its smartphone production capacity, the severe COVID-19 outbreaks in both countries during 2Q21 had a significant impact on production volume. This year, Samsung will remain as the top smartphone brand by quarterly and annual production. However, it will face increasing difficulty in preserving its steadily shrinking market share in the future. The competition will only intensify as rival brands have become excelled at smartphone design and manufacturing.

OPPO’s smartphone production fell by 6.6% QoQ to 49.5 million units for 2Q21. OPPO’s production figure includes devices from sub-brands Realme and OnePlus. Xiaomi’s smartphone production also came to 49.5 million units for 2Q21, showing a QoQ drop of 2%. Xiaomi’s production figure includes devices from sub-brands Redmi, POCO, and Black Shark. On a YoY basis, OPPO posted a growth rate of 80%, whereas Xiaomi posted a growth rate of almost 70%. The high YoY growth rates were attributed to them capturing some market share abandoned by Huawei and the recovery of China’s smartphone market. Both OPPO and Xiaomi claimed second place in the quarterly ranking. Vivo is another Chinese brand that faces a similar situation. Its smartphone production, which includes devices from sub-brand iQoo, dropped by 8.1% QoQ to 34 million units. Vivo took fifth place in the quarterly ranking. Each of these three Chinese brands has made India its second largest base with respect to production and sales operations. Hence, India’s recent COVID-19 surge affected the production and sales performances of all three brands in 2Q21.

Regarding future plans, all three Chinese brands corrected down their annual production targets at the end of 2Q21 due to the COVID-19 surge in Southeast Asia and the capacity crunch in the foundry market. Lowering the annual production target is going to alleviate the cash flow pressure by preventing the component gaps from widening and the inventory of whole devices from rising. It should be pointed out that OPPO, Xiaomi, and Vivo have been very proactive in developing innovative products in the high-end segment of the smartphone market. The high-end models from these three brands are not able to completely assume the market positions that have been held by the flagship models under Huawei’s P and Mate series. Nonetheless, all three brands have posted strong results in both the domestic and overseas markets. To capture more market share, Xiaomi and OPPO are leveraging their respective sub-brands Redmi and Realme that both offer high performance for price. TrendForce therefore believes that these two brands will be more or less evenly matched in terms of production through this whole year.

Apple’s iPhone production reached its lowest point for the year, and its rank fell to fourth place in 2Q21 because the second quarter is the transition period between last year’s and this year’s iPhone series. The quarterly total iPhone production fell by 22.2% QoQ to around 42 million units. In the aspect of product development, Apple will be releasing four flagship iPhone models this September. The major upgrades that come with the new series are the improved camera and the next-generation A15 processor that is manufactured with TSMC’s 5nm+ process. Other upgrades relate to the optimization of the existing functions. This year’s iPhone line-up can be regarded as an extension of the iPhone 12 series that was released in 2020. With regards to pricing, Apple will be maintaining its proactive approach so as to gain more market share. On the other hand, there is the possibility that Apple’s device production during 2H21 will be affected by the recent spike of COVID-19 cases in Malaysia. Due to the severity of the outbreak situation, shipments of ICs from that country have experienced delays.

With an annual production of 9.4 million units for 2021, LG officially terminated its smartphone manufacturing operations in 2Q21

LG signaled that it will be selling or shutting down its mobile phone unit at the start of this year, and then the company announced that it will formally close the mobile phone unit this April. The development of new smartphone models was also suspended. According to the shutdown plan, the production of LG smartphones has ceased since the end of 2Q21. Altogether, LG produced around 9.4 million units this year and is estimated to account for about 1% of the market share. As for LG’s regional markets, the company was focusing on expanding its presence in the respective mid-range segments of the North American and Latin American markets. With LG ceasing its smartphone production, the abandoned market share in North America will be mostly divided among Android phone brands Samsung, Lenovo, and brands owned by local telecom companies. In Latin America, Lenovo and Xiaomi will likely benefit the most from LG’s exit.

Persistent uncertainties in the pandemic’s impact may continue to affect smartphone production in 2H21

Regarding the global smartphone production for the whole 2021, TrendForce has corrected down its estimation from the previous version of 1.36 billion units with a YoY growth rate 8.5% to the current version of 1.345 billion units with a YoY growth rate of 7.3%. Going forward, one of the two main focuses of observation will be on whether the pandemic will cause a further decline in smartphone sales. For instance, while Europe and the US are currently experiencing a resurgence of infections, Southeast Asian countries have also been unable to subdue the most recent outbreaks. In addition, the pandemic continues to pose a risk to the smartphone supply chain. Take Malaysia for example. It accounts for a significant share of the global production capacity for OSAT (i.e., around 15%). With the country now becoming a COVID-19 hotspot, there have been disruptions in the supply of some key semiconductor components. This, in turn, will negatively affect smartphone production during the second half of this year.

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

The iPhone 13 series, which is about to be formally announced by Apple, has already had its exterior design speculated on by various media outlets and fans alike. TrendForce’s latest investigations indicate that some of the notable hardware upgrades of the iPhone 13 pertain to the SoC (manufactured at the 5nm+ node, which enables improved performance and decreased power consumption), display, and camera. In addition, iPhone handsets featuring support for 5G mmWave will be available for sale in more countries after the release of iPhone 13.

The iPhone 13 will see a shift in its charging circuit board from the previous rigid-flex PCB design to a new design featuring SiP combined with flexible PCB. The space-saving feature of this new design will also likely result in increased battery capacity. As for retail prices, the iPhone 13 series is expected to remain similar to the iPhone 12 series assuming Apple is able to effectively control manufacturing costs, since the latest models do not come with significant hardware upgrades. As a result of this aggressive pricing scheme, iPhone shipment will likely maintain its growth trajectory for two consecutive years.

Huawei’s plight led to Apple’s rising market share in the Greater China region

Owing to heavy competition from Chinese brands, sales in the Greater China region accounted for a decreasing share of Apple’s iPhone revenue, from 19.44% in 2017 down to merely 16.33% in 2020. Nevertheless, this downtrend has been gradually reversing since 4Q20, primarily because of increased sanctions against Huawei.As Huawei was cut off from its chip supply in 4Q20, shipment of Huawei smartphones underwent a massive decline accordingly, in turn leaving vacancies in the flagship smartphone market in China. At the same time, while Apple released its new iPhone 12 models, flagship smartphone buyers in China began purchasing iPhones instead. Thanks to this shift, sales in the Greater China region began accounting for a growing share of Apple’s iPhone revenue, from 14.8% up to 19.13% in 4Q20. Since 4Q20, this figure has remained above 18% for three consecutive quarters.

Prior to being sanctioned by the US government, Huawei had enjoyed the highest market share in the high-end smartphone segment in China. After the sanctions were put into place, this segment then became highly sought after by other smartphone brands. However, because other Chinese brands had not previously placed significant emphasis on the high-end market, the iPhone was able to seize most of the market share in the high-end segment left in Huawei’s wake. Furthermore, although other Chinese smartphone brands have started developing their respective flagship models, it takes considerable time to build up their brand images in this segment and attract customers. TrendForce therefore believes that the iPhone will continue to dominate the high-end smartphone market in China for the next two to three years.

iPhones are expected to account for 16.7% of global smartphone shipment in 2021

An overview of iPhone shipments for the past few years shows that iPhone shipment went into a nosedive starting in 4Q18 because the iPhone XS/XR series featured limited improvements yet a significant price hike over its iPhone 8/X predecessor. Alarmed by this decline, Apple immediately revamped its sales strategy for the next-gen iPhone 11, which not only underwent a total overhaul in terms of specs but also experienced a price cut of US$50 for the entry-level model (the Pro model retained its previous-gen equivalent’s price). Apple subsequently released the brand-new iPhone SE in 2020, thereby reversing the downward trajectory of iPhone shipment as a result.

New iPhones saw a deferred released schedule in 2020 owing to the impact of the COVID-19 pandemic, which led to a 14% YoY decrease in iPhone shipment for 3Q20. However, as the new iPhone 12 models equipped with across-the-board hardware upgrades, including 5G functionality, were released in 4Q20, iPhone shipment saw a massive rebound during the quarter and reached a 12% YoY increase in 4Q20 and a further increase of 42% YoY in 1Q21.

Looking ahead to the shipment volumes of the new iPhone models for 2H21, TrendForce expects Apple to maintain its aggressive pricing strategy in order to boost shipment. In addition, as the iPhone 13 series will once again return to a September release, total iPhone shipment is expected to undergo a 30% YoY increase in 3Q21, but a 5% YoY decrease in 4Q21. As such, iPhone sales for 2H21 will likely surpass 2H20 figures. For 2021, iPhones are expected to account for 16.7% of all smartphone shipment, which is a step-up compared to last year.

（Cover image source: Pexels）