According to TrendForce’s research, Apple's Q3 iPhone shipments reached a total of 33.8 million units. Together, the new iPhone 5S and iPhone 5C account for more than 50% of all of Apple’s shipped iPhones. Given that the iPhone 5C's price ended up being a lot higher than expected, its Q4 shipments have been adjusted downwards by 11 million units, and is projected to account for only 24% of the total iPhones shipped during the quarter. The iPhone 5S's sales performance, by comparison, turned out to be a lot better than expected; By the end of 4Q13, the said model is likely to account for nearly 70% of all the iPhones shipped. The total number of iPhones shipped in 4Q13 is projected to increase by 2.2% YoY to 46 million units.
Shipments of Samsung's newest high-end model, the Galaxy Note 3, rose to 15 million units in 2H13, whereas the shipment proportion of the Korean company's mid-ranged devices reached 60%. Sony has been making various product related adjustments ever since it formally entered the smartphone market in 2012. In addition to keeping its own designs for all of its products, the company has targeted its mid-ranged devices to foreign markets, and differentiates its high-end products based on specific hardware specs, camera functionality, and water proof designs. As a whole, the shipments of Sony's entire smartphone lines have managed to improve significantly from 1Q13. In Q3 alone, the Japanese company's smartphone shipment grew to over 12 million units, a 10.6% QoQ and 79% YoY increase. Its market share rose to 5% during the same period.
LG has been known to utilize and take advantage of the experiences it has accumulated during the days of making feature phones and selling various electronics products. In 3Q13, the company's smartphone shipments exceeded 10 million units, showing a growth of 22.7% QoQ and 93% YoY. The 4Q13 shipment of the struggling Taiwanese smartphone company, HTC, is predicted to fall by approximately 16.2% QoQ and 40% YoY to 5.2 million units. The main reasons for HTC’s shipment decline include its waning market shares in the US and European markets and the fact that it failed to introduce any new products in 4Q13 other than the One Max.
Competition Intensifies among Smartphone Manufacturers, Economies of Scale Key to Survive
Looking ahead to 1H14, TrendForce believes that smartphone manufacturers worldwide will face a lot of potential challenges. First, for the smartphones makers whose shipments do not exceed 3% of the global total --in other words, those whose shipments do not reach 35 million units-- obtaining upstream components and materials at good prices can be difficult. The inability of these manufacturers to adjust or lower their products’ high retail price can be a detriment given the prevalent price-drop trend within the market. Taking the said factor into account, it is especially critical that smartphone manufacturers are able to take advantage of the economies of scale and maintain proper cost advantage within the industry.
Second, with chip manufacturers such as Qualcomm and Mediatek managing to facilitate the surge in mid to low-end smartphones, the hardware SPEC differences among competing smartphones have become increasingly less noticeable. Due to the existence of such a trend, companies hoping to expand in the market need to think hard about how to increase the uniqueness of their products and offer something different.
Finally, given that smartphones with mid to low-end prices are generating smaller and smaller margins, the efficiency at which various branded manufacturers are able to assemble their own products have become less impressive than that of large scaled ODMs. Whether it is in the area of assembly deployment or manufacturing, professional ODMs are generally more capable of achieving economies of scale. Because of this, the small to mid-sized manufacturers that are typically weak in the areas of capital, cost, technology, and market performance are likely to exit the market rapidly. TrendForce predicts that many of China's “white box” smartphone manufacturers will be among the first to face such an outcome. The gaps left by these manufacturers will be filled by leading brands from China and various other foreign countries.