Source to media China Times, after an extensive promotional campaign, Huawei’s Mate 60 smartphone, which has regained attention in mainland China’s media and online platforms, has finally secured the second position in the Chinese domestic smartphone market for the 36th week (4^th~10^th, Sep.), with a 17% market share. It is just a 0.2% difference from the top-ranked Honor smartphone. Supply chain sources estimate that by the 37th week (11^th~17^th, Sep.), Huawei could potentially claim the top spot in market share.

According to reports from “Mydrivers,” Huawei’s smartphone sales have been improving lately, thanks to media and online promotion of the Mate 60. Data from authoritative market research organizations in the supply chain indicates that in week 36 (4^th~10^th, Sep.), Huawei achieved a 17% market share in smartphone sales, securing the second position in the Chinese smartphone market.

The report notes that although Huawei is ranked second, this achievement in market share comes amidst “well-known significant pressures.” Moreover, it trails only 0.2% behind the top-ranked Honor (17.2%). Supply chain insiders anticipate that by week 37 (11^th~17^th, Sep.), Huawei is poised to claim the top spot in market share, a remarkable feat considering the significant pressures facing the company.

The report highlights that Huawei’s current sales situation is characterized by a shortage of the entire Mate 60 lineup. Supply chain sources reveal that orders for the Mate 60 Pro have increased to 15-17 million units. Information from distributors indicates that Huawei began comprehensive sales of the Mate 60 Pro in physical stores starting from September 10th.

Analysts had previously expressed optimism about Huawei’s return to the high-end smartphone market in mainland China. The previous Mate50 series achieved sales of approximately 5 million units, and it is expected that the Mate 60 series could surpass 6 million units.

According to TrendForce research on the ranking of 2Q23 smartphone production, in China, Transsion (including TECNO, Infinix, and itel) eclipsed Vivo to secure the fifth spot for the first time ever. TrendFroce reveals that Transsion’s high production output benefited from a trifecta of inventory replenishment, new product launches, and its entry into mid-to-high-end markets. Demonstrating robust production performance since March, the company’s growth trajectory is poised to extend its momentum into Q3. Meanwhile, Vivo (including Vivo and iQoo) is treading cautiously amid a sluggish global economy, which is evident in its conservative production plan: Vivo churned out 23 million units in Q2—a modest quarterly increase of 15%—and as a result, slipped to sixth place in global rankings.

Xiaomi (including Xiaomi, Redmi, and POCO) is reveling in a bountiful Q2, posting production numbers of around 35 million units—a staggering seasonal uptick of 32.1%. This boom can be attributed to a strategic depletion of channel inventory coupled with the allure of new product launches. However, Xiaomi’s channel inventory still runs high, setting the stage for a Q3 that is likely to mirror its Q2 performance. On the other side of the spectrum, Oppo (including Oppo, Real, and OnePlus) also had a fruitful Q2. The brand primarily rode the wave of rebounding demand in Southeast Asia and other regions, amassing approximately 33.6 million units and marking a seasonal leap of 25.4%. With seasonal demands on the horizon, Oppo’s Q3 production is poised for an estimated growth of 10~15%, primarily targeting markets in China, South Asia, Southeast Asia, and Latin America, hot on Xiaomi’s heels.

Currently, the top-ranking Honor smartphone is also a Chinese smartphone manufacturer. Originally launched as a sub-brand under Huawei’s product line series in September 2011, it began independent operations on December 16, 2013. Towards the end of 2020, Honor separated from Huawei, and there were multiple rumors about Honor’s independent listing preparations, which the company denied. (Image credit: Huawei)

(Source: https://www.chinatimes.com/realtimenews/20230921005374-260409?chdtv)

According to a report from China Media Jiwei, there are recent rumors suggesting that the Chinese smartphone brand OPPO may restart its chip design business and has begun recruiting former employees from ZEKU. In response, OPPO stated that the company has terminated its ZEKU business and declined to provide further comments.

On May 12th of this year, OPPO announced that due to global economic uncertainties and a volatile smartphone market, the company needed to make strategic adjustments to address long-term challenges. Following a decision by the Executive Management Team, the ZEKU business was terminated. The company is committed to handling all related matters resulting from this business adjustment and will continue to create value through its products.

ZEKU issued a notice stating that the company and its wholly-owned subsidiaries and branches would be dissolved starting from May 12th. They would also legally terminate all labor contracts. Starting on May 19th, they began signing compensation agreements with employees, providing compensation of N+3, and consolidating all May salaries into a single monthly payment. Social insurance and housing fund for May were also processed.

It is worth noting that before the business termination, ZEKU had a workforce of over 3,000 employees, with 2,500 of them based in China. In terms of personnel scale, it was one of China’s top-tier chip design companies. Established four years ago, ZEKU attracted talent from well-known chip design enterprises such as Spreadtrum, Hisilicon, Qualcomm, as well as recruiting numerous talents from renowned domestic microelectronics institutions through campus recruitment efforts.

(Photo credit: OPPO)

Major economies are investing heavily in semiconductor industries, with China leading at $143 billion, the U.S. at $52.7 billion, and the EU at $47 billion, according to “EE Times”. India plans to give $922 million amid U.S.-China tensions.

Despite China’s much larger subsidies compared to India’s, the Chinese semiconductor industry faces various challenges. But under mainly from the United States, to slow down its progress, some Chinese companies are struggling to survive, while others are shutting down. For instance, after OPPO’s unexpected announcement in May to close their IC design company ZEKU, active for less than 4 years, Holding Group, Geely, also declared on August 8th that it would halt its self-developed chip business through the Xingji Meizu group, only 5 months after its launch.

According to a recent report from ‘EE Times,’ governments from around the world are actively pursuing semiconductor self-sufficiency to meet their high-tech and communication needs. China, in particular, has taken the lead by planning a substantial $143 billion subsidy program to boost its industry and reduce dependence on the United States.

In the U.S., the ‘Chips ACT’ passed last year allocated $52.7 billion in subsidies. As per McKinsey, the cumulative commercial investments related to this endeavor have already exceeded $200 billion.

The European Union is also making its mark, aiming to increase its global semiconductor market share from 10% to 20% by 2030. The ‘European Chips Act’ is expected to see $47 billion in government investment. TSMC has confirmed plans to establish a factory in Germany and is expected to receive relevant subsidies.

Singapore is projecting a $19 billion subsidy for its semiconductor industry, while Japan’s exact subsidy scale remains unknown, with reports suggesting a minimum of $6.5 billion. South Korea is focusing on tax reductions for semiconductor-related companies, offering 15% tax credits for corporate groups and up to 25% for small and medium-sized enterprises.

Recently, the UK and India have joined the battle. The UK has set aside a $1.5 billion subsidy, and India’s ‘Semicon India’ initiative offers at least $922 million to bolster its influence in the global electronics supply chain. While Malaysia hasn’t disclosed the amount of support for its chip industry, the country is providing approved priority industries, especially high-tech firms, with a full 10-year tax exemption. The government also offers investment subsidies and various incentives within specific investment zones.

Amidst U.S. restrictions, China initially aimed to boost its chip industry and create its own ‘China chips.’ However, setbacks have occurred. OPPO’s IC design company, ZEKU, formed in 2019, spent a staggering $44 billion over three years only to shut down on May 12th, leaving 3,000 employees jobless. Geely Holding Group’s subsidiary, Xingji Meizu, also announced on August 8th their decision to halt self-developed chip operations due to global economic uncertainties. Their focus will now turn to product innovation and software user experiences.

(Source: https://ec.ltn.com.tw/article/breakingnews/4392195)

Chinese smartphone brands such as Xiaomi, OPPO, and Vivo all have their own production lines. In recent years, these brands have accelerated their overseas deployment due to rising labor costs in China, growing geopolitical risk factors, and the spread of the COVID-19 pandemic. Not only will Xiaomi produce mobile phones in Vietnam, but the company will also continue to expand production lines in India and Indonesia in the coming years. OPPO has also set up factories in countries including India, Indonesia, and Turkey to meet the needs of neighboring markets. Vivo has successively set up factories in India, Bangladesh, and Indonesia, and initiated its production lines in Turkey and Pakistan in 2021. Since current trends have the Chinese market declining more than the global market, OPPO and Vivo’s proportion of overseas production capacity is expected to increase gradually. As for Xiaomi, which has always been active in overseas markets, the company will continue to expand its production capacity in India and Vietnam.

Xiaomi’s achievements in expanding overseas markets are most outstanding, OPPO following suit, Vivo rushing to catch up

From the perspective of Chinese brands, Xiaomi has been deeply involved in overseas markets for many years. Its overseas revenue was only RMB9.1 billion in 2016, but by 2018, overseas revenue had exceeded RMB70 billion. Xiaomi currently has a market share varying between 10 and 25% in Europe, India, Indonesia, Vietnam, and the Philippines. On the other hand, OPPO has been tackling overseas markets aggressively since 2018, and currently has a market share between 10-15% in India, Pakistan, Indonesia, Vietnam, and the Philippines. As for Vivo’s late start, its market share in India, Pakistan, and the Philippines is approximately 10-15%.

If the overall market is divided into the Chinese market and the non-Chinese market, shipments from Xiaomi, OPPO, and Vivo to the non-Chinese market are estimated to account for 74%, 66%, and 46% of total shipments, respectively, in 2021. Since China’s smartphone shipments may decrease by 16% in 2022, and recovery is limited in the short term, Xiaomi, OPPO, and Vivo are expected to focus more on overseas markets in the future and the proportion of non-Chinese market shipments is expected to increase further.

（Image credit: Pexels）

According to TrendForce research, global smartphone production volume in 1Q22 was 310 million units, a QoQ decrease of 12.8%, primarily attributed to ongoing inventory adjustments in various distribution channels performed by a number of brands and the cyclical off-season, which led to relatively weak production performance in 1Q22. In 2Q22, a resurgence of the pandemic in the world’s largest consumer market, China, exacerbated the drop in global 2Q22 mobile phone production to 309 million units. However, compared to the same period in 2021, when a resurgent pandemic in India and Southeast Asia caused a sharp drop in total production, mobile phone production grew slightly by 0.7%.

TrendForce further indicates that the war between Russia and Ukraine continues to exacerbate the rising global inflation issue. High inflation means that personal disposable income will shrink and will inevitably lead to prolonged replacement cycles and reduced purchasing budgets for individual devices. Summarizing 2022, corrections in 1H22 were primarily due to the impact of China’s lockdowns on the economy while corrections in 2H22 highlight the inflation crisis. The total production forecast for the entire year will be revised down to 1.333 billion units and there is still room for downward revisions in the future.

Due to China’s economic headwinds, shipments fall again to 283 million, an annual decline of nearly 13%

From a regional perspective, due to China’s insistence on maintaining a strict “dynamic zero-COVID” policy and the recent festering of the pandemic, economic performance is also facing greater downward pressure and the demand for smartphones has likewise cooled in the face of pandemic prevention measures. Overall, the sales market share of China’s smartphone market still ranks first in the world but, due to the impact of the pandemic, its market share has dropped from 24.2% last year to 21.1% this year while the corresponding total shipment forecast fell from 325 million units last year to 283 million units, an annual decline of approximately 12.9%. Although the impact of the pandemic in the remainder of the region has been comparatively blunted, in the face of a rising inflation crisis, even the overpopulated Indian market will be unable to support substantial growth. From the perspective of the 2022 national shipment share ranking forecast, the top three positions will be held by China, India, and the United States, accounting for a 21.1%, 13.1%, and 11.0% share, respectively.