TrendForce Projects Global Smartphone Production for 4Q17 to Grow by 6.3% YoY as iPhone X Drives Quarterly Total to Its Peak for the Year

TrendForce’s latest analysis of the global smartphone market finds that sales are growing again due to the effects of the year-end busy season. The global smartphone production volume for the third quarter of 2017 totaled 384 million units, registering a year-on-year increase of 6%. Chinese brands together posted a much higher year-on-year growth of 20%. In terms of ranking by production volume, Samsung, Apple, Huawei, OPPO and Vivo still held their respective positions in the top five for the third quarter, while Xiaomi followed at sixth place.

For this fourth quarter, TrendForce estimates that the global smartphone production volume will reach its peak for 2017 with a total of 425 million, up 6.3% year on year. Additionally, the global total for the entire 2017 is currently estimated at 1.46 billion units.

Samsung’s production volume reached its peak for this year in the third quarter and is projected to fall this fourth quarter due to competition from iPhone X

In terms of market performances of the various brands, the leader Samsung has suffered some setbacks in China, and the brand’s share of total sales in that market has been falling this year. Nevertheless, Samsung has a comprehensive smartphone lineup covering all market segments from the low-end to the mid-range and the high-end. Furthermore, the company has established a wide and deep network of sales channels across the globe. Therefore, Samsung is still able to produce 75 million to 80 million units on average every quarter. 

In the third quarter, Samsung’s smartphone production rose on the back of the release of the Galaxy Note 8 series and the continuous strong sales of the Galaxy J series in the mid-range and low-end markets. Samsung’s total volume for the period reached 81 million units, representing the highest point for the brand this year. Samsung thus retained its top place in the third-quarter ranking.

Samsung is expected to slightly scale back the production of its high-end models in the fourth quarter as the brand is seeing the sales of its smartphones being squeezed by the strong demand for Apple’s latest iPhone devices. TrendForce estimates that Samsung’s fourth-quarter total volume will come to 77 million units, a 5% drop from the third quarter.

Apple managed to advance its iPhone production volume by just 3% in the third quarter compared with the second quarter. On the whole, iPhone 8 and 8 Plus helped sustained Apple’s production during the third quarter. As for highly anticipated iPhone X, the yield rates of its key components (e.g. Wi-Fi modules and 3D sensing modules) have been lower than expected, thus delaying production of the device. With the limited support from iPhone X, Apple was not able to significantly raise its total volume.

On the other hand, TrendForce estimates that the iPhone production volume for this fourth quarter will reach 81 million units with iPhone X accounting for 33% of the total. TrendForce expects a surge of iPhone X production that will last through the first half of 2018.

The deal between HTC and Google did not significantly influence the respective production volumes of these two brands in the third quarter. However, TrendForce believes that HTC’s smartphone production will continue to contract in the future. Google conversely could raise the market share of its branded smartphones with the additional R&D capability that it has acquired. HTC’s smartphone production volume for the third quarter plunged by 46% compared with the second quarter since the company offers fewer models than before and lacks differentiations from competitors. Google by contrast saw the production volume of its branded smartphones went up by around 40% from the second quarter due to the release of Pixel 2 and 2 XL in October. Google is expected to post sequential increase for this fourth quarter as well.

Chinese brands together accounted for 56% of the global production in third quarter with a total volume of 214 million units

Chinese brands made gains in the third quarter due to demand generated by the releases of their flagship devices during the year’s second half. Huawei’s smartphone product volume rose by 9% from the second quarter and could reach a total of 45 million units for this fourth quarter because of the year-end seasonal demand. Huawei’s annual total for 2017 is currently estimated around 150 million units.

Huawei’s smartphone strategy for this year is to focus on selling its high-end, high-margin models while reducing the number of its low-price, entry-level models in the lineup. Huawei’s total production volume for the second half of 2017 will register similar growth compared with the result of the same period in 2016. On the other hand, Huawei continues to expand its presence in the overseas markets and will remain as the world’s third-largest smartphone maker and the leader among the Chinese smartphone brands for 2017.

OPPO and Vivo were respective second and third in the third-quarter ranking of the Chinese brands. Their combined production volume grew by an average rate of 5% from the second quarter. Going forward, the combined volume of the two brands in fourth quarter is expected to be on par with their third-quarter result. In terms of annual performance, their combined volume will grow substantially with the average rate estimated at 20%. OPPO and Vivo’s success is mainly attributed to having sales channels that extend to the remote areas of China and their ongoing expansions in the overseas markets.

With the help of its latest model Mi MIX 2, Xiaomi produced 25.5 million units for the third quarter and was just behind Vivo in terms of global market share. In India, Xiaomi continues to work closely with the local mobile operators as it struggles with Samsung for dominance in the country’s mid-range and high-end market segments. TrendForce estimates Xiaomi’s fourth-quarter production volume will grow by 10% from the third quarter to 28 million units.

With regard to the global production volume for the fourth quarter of 2017, TrendForce estimates a growth of 10.5% from the third quarter’s total because of the strong sales of the latest iPhone devices. Looking ahead to 2018, the global smartphone market will stay on a path to gradual saturation. TrendForce believes that the abilities to control rising component costs and expand overseas channels will be key factors affecting the performances of respective brands.