Although the global smartphone market is becoming increasingly saturated, it is still worth looking forward to demand in emerging markets such as Southeast Asia and Africa when caught in an environment with limited momentum. . Due to the recent expansion of infrastructure construction in Africa, the regional smartphone market has the opportunity to replicate the prior development path of Thailand, Vietnam, and Indonesia. TrendForce forecasts total smartphone shipments in Africa to reach approximately 107 million units in 2022. Sub-Saharan Africa, which accounts for 78% of Africa’s total population, holds the greatest potential and countries such as Nigeria, Ghana, Senegal, and Tanzania are worthy of attention.

Taking the Sahara Desert as a natural barrier, North Africa cleaves closer to Europe and the Middle East, modernizing earlier, and possessing higher GDP per capita and relatively greater spending power. Looking at Egypt, its mainstream smartphone brands in 2021 were Samsung, OPPO, and Xiaomi. As for Africa south of the Sahara, taking Nigeria as an example, mainstream brands are TECNO, Infinix, and Itel, which is very different from the Egyptian market. TECNO, Infinix, and Itel are owned by Transsion Holdings of China and, in terms of the overall African smartphone market, Transsion Holdings is already dominant. These three brands captured an estimated combined market share of approximately 52% in 2021, eclipsing Samsung’s 15%.

TrendForce believes that mainstream mobile phone brands in Africa are very different from markets in Europe, North America, and East Asia and are mainly influenced by factors such as local spending power, communication services, and user needs, while mobile phone pricing is undoubtedly the decisive factor. For example, approximately 60% of smartphones sold in Egypt are priced between $100 and $200. While in sub-Saharan Africa, excluding a few countries with high GDP per capita such as Gabon and South Africa, most smartphones are sold at below US$100 in the market. However, from the perspective of mainstream global smartphone brands, the price of low-end smartphones is still higher than US$160 which remains quite unaffordable for the majority of local consumers. This pricing gap gives TECNO, Infinix, and Itel more room to operate.

In addition, the reason Transsion Holdings’ brands can dominate the African smartphone market includes many localized marketing strategies in addition to price factors. For example, cleaving close to local consumption habits, setting up physical sales locations, launching models that support 4 sim cards to meet the needs of users with multiple phone numbers, or installing large-capacity batteries in low-end mobile phones to reduce the inconvenience of frequent searches for charging stations, all of which help to enhance the competitive strength of the Transsion brand. Transsion Holdings is expected to continue leading the African market from 2022 to 2025.

（Image credit: Unsplash）

Global smartphone production came to 356 million units for 2021, showing a QoQ increase of 9.5%, according to TrendForce’s latest investigations. The second half of last year saw demand injections related to the peak promotion season for e-commerce platforms and year-end holiday sales. These factors thus bolstered smartphone production and resulted in 4Q21 seeing the highest QoQ growth rate for the year. Apple’s new iPhones were the primary growth driver. On the other hand, the performances of a few smartphone brands were constrained by the shortage of some key components. Hence, the total smartphone production for 4Q21 was slightly lower compared with 4Q20 or even 4Q19.

Apple took production leadership in 4Q21 with record high of 85.5 million units

After unveiling the iPhone 13 series in September, Apple started aggressively ramping up the shipments of these new devices to meet market demand. Owing to its fast-paced sales and marketing rhythms, Apple has been able to take first place in the quarterly ranking of smartphone brands by production market hare for many fourth quarters, and 4Q21 was no exception. Besides maintaining its top position in the fourth-quarter brand ranking, Apple raised its quarterly iPhone production to a new record high of 85.5 million units, a 66.0% QoQ increase. In the aspect of pricing strategy, the prices of the new iPhone 13 models were reasonable for consumers, while the price reductions for the older iPhone models were noticeable as well. Moreover, the capturing of the market share left by Huawei can be considered as the main factor behind Apple’s stellar performance in 4Q21. Over time, the orders for Huawei’s flagship models (i.e., the P and Mate series) have been gradually replaced by iPhone orders. In terms of annual production, Apple reached 233 million units for 2021, up from almost 200 million units for 2020. The growth was mainly attributed to an expansion of Apple’s market share in China from 10% to 16%. Samsung took second place in the global brand ranking for 4Q21 with 71 million units, a 2.9% QoQ increase. In 2Q21, the spread of COVID-19 outbreaks in Vietnam affected smartphone production facilities in the country and lowered Samsung’s capacity utilization rate. But apart from that quarter, Samsung’s performance remained stable for the other three quarters of last year. For the ranking of smartphone brands by annual production, Samsung was still the leader for 2021 with 275 million units.

OPPO (including Realme and OnePlus) took third place in the ranking with a quarterly production of 48 million units, a 5.9% QoQ decrease, for 4Q21. Xiaomi (including Redmi, POCO, and Black Shark) took fourth place with a production of 45.5 million units, a 2.2% QoQ increase. Fifth-ranked Vivo (including iQoo), on the other hand, reduced its smartphone production by 11.8% QoQ to 30 million units. As these three Chinese brands’ target markets and product strategies show significant overlap, their control of key components that are currently in shortage will have a direct impact on their production volumes going forward. It should also be pointed out that Honor, which was spun off from Huawei in early 2021 and underwent a period of corporate restructuring and component procurement in 1H21, experienced a meteoric rise in 2H21. Much like other Chinese brands, Honor adopts a sales strategy that primarily focuses on the Chinese market, meaning Honor’s smartphone business will continue to affect OPPO, Xiaomi, and Vivo, all of which place a top priority on domestic sales.

Annual smartphone production for 2022 will likely reach 1.381 billion units despite potential decline

Assuming that the global spread of the COVID-19 pandemic continues to slow, TrendForce expects annual smartphone production for 2022 to undergo a slight YoY increase of 3.6% to 1.381 billion units. Not only is smartphone demand expected to decline in China, which represents the largest consumer market in the world, but other markets will also exhibit only limited growth. Hence, the leading growth drivers will come from both cyclical replacement demand and new demand from emerging markets. Notably, in addition to factors such as foundry capacity allocation, global inflation, and energy shortage, whether an economic recovery will bring about positive change for the smartphone market will continue to influence the overall performance of the industry. TrendForce therefore believes that the annual smartphone production for 2022 may still face potential downside risks.

Regardless, the recent war between Russia and Ukraine has generated a host of issues including exchange rates, inflation, and logistics problems that affect smartphone sales in Eastern Europe. With regards to the market share of smartphone brands in Russia and Ukraine last year, the top three brands by sales included Samsung, Xiaomi, and Apple, with a combined 45 million units sold, accounting for 3% of the global total. Preliminary assessments indicate that the ongoing war will not have a drastic effect on smartphone production for 2022, though TrendForce also does not rule out the possibility that the resultant global economic problems may affect overall smartphone demand.

According to TrendForce research, since reaching a peak of 1.457 billion units in 2017, it has been difficult for smartphones to significantly increase their penetration rate. In addition, mobile phone hardware updates have slowed which has lengthened the consumer replacement cycle. Add to this the negative effects of the COVID-19 pandemic and growth in overall smartphone shipment volume has become increasingly difficult to achieve. However, based on the premise that the pandemic is slowing down, coupled with the strategy of certain brands actively exploring emerging markets, growth momentum in the global smartphone market has gradually gotten back on track in 2021, with shipments reaching 1.333 billion units, or 6.4% growth YoY. This upward trend is expected to continue in 2022, with shipments expected to reach 1.386 billion, or 4% growth YoY.

TrendForce emphasizes, it should be noted that the status of the pandemic is still the biggest concern affecting the smartphone market this year and this applies doubly to the production capacity of semiconductors. The current problem of material shortages has yet to be alleviated and RF chips, OLED DDICs, and PMICs continue to be in short supply. In addition, issues such as China’s rolling blackouts, spiking shipping costs, and rising chip costs, will cause smartphone brands to face price pressures and it remains to be seen whether higher prices will be acceptable to consumers.

Judging from the 2022 brand market share forecast, Samsung will remain number one followed by Apple, Xiaomi, OPPO, VIVO, and Transsion. Among these companies, Xiaomi is the brand with the fastest-growing annual shipment growth rate. In addition to stimulating sales in the Chinese market through the strategy of expanding brick and mortar stores, Xiaomi’s sales occur mostly overseas, and it is first in market share in India and Russia. In the future, it will continue to explore the Middle East, Latin America, Southeast Asia, and Africa markets.

Four keys to mobile phone trends in 2022

Folding phones, 5G, self-developed chips, and a reduction in the number of rear-facing cameras are the four keys to focus on this year. In terms of 5G mobile phones, the global penetration rate in 2021 was 37%, this is expected to rise to 47% in 2022, and may exceed 50% by 2023. At present, China is the most active country in promoting 5G models. More than 80% of the country’s shipments are 5G mobile phones. Therefore, the key to increasing the global penetration rate of 5G mobile phones in the future is focusing on regions outside China.

Regarding self-developed chips, in the past, only Samsung, Apple, and Huawei were capable of self-developing chips. However, Google launched its self-developed Tensor processor in 2021, and Xiaomi, OPPO, and VIVO have each launched professional imaging chips in succession.

（Image credit: Apple）

In recent years, the biggest trend of smartphone camera modules is the increasing number of rear camera modules, according to TrendForce’s investigations. According to TrendForce research, triple camera modules surpassed dual camera modules to become mainstream in 2020 and drove the continued growth of smartphone camera module shipments. Annual smartphone camera module shipments in 2022 are expected to reach 4.92 billion units, or 2% growth YoY.

However, the trend towards multiple cameras started to shift in 2H21 after a few years of positive growth. The previous spike in the penetration rate of four camera modules was primarily incited by mid-range smart phone models in 2H20 when mobile phone brands sought to market their products through promoting more and more cameras. However, as consumers realized that the macro and depth camera usually featured on the third and fourth cameras were used less frequently and improvements in overall photo quality limited, the demand for four camera modules gradually subsided and mobile phone brands returned to fulfilling the actual needs of consumers. In addition, increases in the pricing of semiconductor chips such as PMICs and Driver ICs, as well as increased shipping costs, have driven the cost of mobile phones up sharply. Without the ability to effectively pass this cost onto consumers, any remaining allowance to economically install low-end cameras has been effectively eliminated.

Camera resolution upgrades: fastest growing market share encompasses 49-64 million pixel cameras

Although camera shipment growth has slowed, camera resolution continues to improve. Taking primary cameras as an example, the current mainstream design is 13-48 million pixels, accounting for more than 50% of cameras in 2021. In second place are products featuring 49-64 million pixels which accounted for more than 20% of cameras last year with penetration rate expected to increase to 23% in 2022. The third highest portion is 12 million pixel products, currently dominated by the iPhone and Samsung’s flagship series. However, a 48 million pixel primary camera is expected to be introduced to the iPhone 14 Pro series (tentative name) that Apple will release this year, further reducing 12 million pixel products to a 15% share in 2022.

In addition to the original Samsung and Xiaomi brands employing 108 million pixels cameras, Vivo and Honor also introduced similar resolution cameras in 2021. There is a chance 200 million pixel products will be ready for commercial use in 2022, driving the penetration rate of ultra-high pixel products to an expected level in excess of 5% in 2022. However, such ultra-high pixel products primarily focus on enlarging photographs without losing image quality. Therefore, TrendForce believes that any marginal benefits these products bring to consumers will gradually decrease and the penetration rate will not grow as quickly as 49-64 million pixels products.

Overall, TrendForce believes that the number of camera modules mounted on smartphones will no longer be the main focus of mobile phone brands, as focus will return to the real needs of consumers. Therefore, triple camera modules will remain the mainstream design for the next 2~3 years.

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