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Global smartphone production growth to drop to 5% in 2018: TrendForce

201801030004

Global smartphone production is expected to slow down in 2018 at around 1.53 billion units, a mere 5% growth over the last year, due mainly to the arrival of the plateau period despite strong momentum led by Chinese brands, according to the latest forecast by Taipei-based tech research house, TrendForce.

Smartphone makers are tipped to face heavier cost pressure as the prices of key smartphone components rise constantly, TrendForce said, noting last year’s strong momentum was mainly driven by Chinese telecommunication operators’ subsidies to users in 4G monthly fees, along with Chinese brands’ active deployment in emerging markets.

Strong growth momentum in 2017 brought the global smartphone production to 1.46 billion units, up 6.5% from 2016.

TrendForce said in 2018, smartphone growth trend is coming to a plateau period despite ambitious performances of Chinese brands, and the industry will not be able to deliver the same impressive results as in the past years when the market always had a double-digit growth.

In comparison, influenced by innovative applications in iPhone X and its future flagship models, non-Chinese vendors are expected to reverse the decline since 2015 and to record a slight growth of 3%.

Samsung will face challenges as new iPhones are expected to improve specification and performance to increase market share, according to TrendForce Samsung’s success of its budget J (Junior) series has made up for its losses in the Chinese market. It turned out to record 320 million units for smartphone production in 2017, an increase of 3%. As the industry leader, Samsung will remain the top for smartphone production in 2018, but will witness a 3% drop in production volume because of great challenges and fierce competition brought by its rivals, including Apple in the high-end market and a number of Chinese brands with Android OS, the tech research house said.

Though iPhone X sparked a heated discussion in 2017, iPhone’s production volume increased by only 3% over 2016 due to the technical barriers in improving the yield rate of innovative models. With regard to the supply chain, new iPhones in 2018 will continue to improve Face ID technology, screen to body ratio, etc., moreover, the company plans to increase the memory content and embed AMOLED display in two of its models, TrendForce said.

In order to meet the demand in different ranges of the market, Apple will launch the second generation of iPhone SE which targets at the mid-range segment. Therefore, Apple will continue to expand its iPhone production in 2018, and the volume is estimated to register a 7.5% growth, Trendforce said.

Chinese brands to depend on overseas market for further growth

Chinese smartphone brands have gained remarkable expansion in past years because of strong domestic consumption. But as the penetration rate of smartphone goes saturated in China’s existing market, both existing brands and startups turn to emerging overseas market and overseas telecommunication operators to keep their market shares, TrendForce said.

In particular, Xiaomi registered a considerable growth of 76% in smartphone production, as a result of increasing physical distribution channels and expanding overseas markets such as India and Indonesia. Transsion brands also had an impressive performance in emerging overseas markets. In 2018, TrendForce expects Xiaomi and Transsion brands to continue the growth overseas, and the product market share of Xiaomi is expected to keep pace with OPPO and Vivo, according to the forecast.

OPPO and Vivo recorded annual production growth of 17.8% and 19.5% respectively in 2017. Since OPPO and Vivo both adopt the marketing strategy that focuses on domestic consumption, together with the high specification of their most models, they will face narrower room for profit growth and heavier pressure for growth as the prices of key components rise. As the result, the smartphone productions of OPPO and Vivo in 2018 are expected to drop by 10% compared with this year, TrendForce said.

All-screen, dual-camera mainstream specification for smartphones in 2018

201801030003Smartphone brands will continue to enhance the user experiences in 2018, with development focusing on 18:9 all-screen, dual-camera, wide-angle front camera, AI embedded applications, etc. In terms of biometric recognition, iPhone will continue to feature Face ID while other brands will use mainly capacitive fingerprint sensors in the first half of 2018 due to existing technical barriers. Smartphone models with under-display fingerprint or 3D sensing will have a chance to enter mass production in the second half of 2018, said TrendForce.

According to recent media reports, a boom in production of Apple iPhones has helped lift the economy of Taiwan, which still relies on high-tech manufacturing contracts despite increasing competition from offshore.

Tech specialists say the Silicon Valley icon is looking this year to Taiwanese firms for chip production, camera modules, displays and final assembly.

Taiwanese-owned Foxconn Technology often assembles Apple gear at sprawling factories in China, for example. Taiwan Semiconductor Manufacturing Co., the world’s biggest chipmaker, is building the A11 processor for the iPhone 8, local media reports said.

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