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Global smartphone market to remain weak in 2018: TrendForce

The Eye on Taiwan news staff

The global smartphone market will remain weak in 2018 due to smaller demand and fewer replacement purchases, according to local research house TrendForce.

Faced with a continuous rise in the costs of upstream components, downstream mobile phone vendors have to reconsider the pricing or adjust the specification of end-products to cope with the cost pressures, TrendForce said in a press release on Tuesday.

The distribution of market share among the major players is expected to remain generally the same as last year. As a result, the global smartphone production for 2018 is estimated at around 1.5 billion units, a 2.8% annual growth only, down from previously forecast 5%, the research house said.

Looking back to the global smartphone market in 2017, the sales in 1H17 were weaker than expected since the demand was affected by the anticipated launch of new iPhones in 2H17, TrendForce said.

In the second half of 2017, major smartphone brands put the focus on all-screen models, hoping to boost the replacement purchases at the year-end, but the sales turned out to be lower than expected. Therefore, since the mid 4Q17, smartphone vendors have lowered their quarterly production plans due to the huge cost pressures brought by excessive inventory, TrendForce said.

Competition to intensify in 2018

As the industry leader, Samsung will remain the top for smartphone production in 2018 and is expected to continue the success of its budget A and J series. The smartphone production volume of Samsung is estimated at 300 million units in 2018, a decrease of 5% year-on-year, TrendForce said.

Apple remained the second place in the ranking of smartphone production for 2017. For this year, Apple is set to launch three new flagship models in 3Q18 and will expand the adoption of Face ID and all-screen technology in these new iPhones, along with upgrading their existing functions and increasing the memory content as well, it said.

According to TrendForce, iPhone’s annual production volume is expected to increase by 6% because of improved specifications of new iPhones and Apple’s expansion in the Indian market.

LG previously announced its withdrawal from the Chinese market, reflecting that international brands now find it harder to survive in the Chinese market, where there is a growing support of the domestic brands.

More importantly, international brands have difficulty to stay profitable in China because the offerings of the domestic brands have higher performance-price ratios, it said.

LG owns worldwide brand awareness and solid foundation in the North American market. Despite slight decline of production volume, LG still has the opportunity to rank the seventh in the global smartphone market this year, with an expected production of 60 million units, the research house said.

Sony has changed its product strategy in recent years, shifting to more profitable mid- and high-end phones. However, under the influence of weaker demand in general, its production volume for the entire 2018 will be only 15.3 million units, a 4% decline over the last year, TrendForce said.

Nokia’s partnership with HMD and FIH Mobile had a new start in 2017, recording a production volume of 11.5 million units in the debut year. Nokia will not only benefit from bargaining power of FIH Mobile but also save the import tariff because the plants are located in India. As the result, Nokia is expected to continue the growth momentum this year in the mid and low-end smartphone market where cost pressures are extremely high. Nokia’s annual production volume for 2018 is estimated to grow by more than 70% and may exceed 20 million units, it said.

Chinese smartphone brands to focus on emerging markets

Chinese smartphone brands have gained remarkable expansion in past years because of strong domestic consumption. But as the domestic market becomes saturated, Chinese brands, both existing ones, and startups have turned to emerging overseas markets and cooperated with overseas telecommunication operators to keep their market shares.

As for Chinese brands, Huawei will further increase the use of in-house chips provided by HiSilicon in its smartphone lines, while actively developing 3D Sensing applications at the same time. It reduced the proportion of low-end mobile phones in its product mix last year but will revise this strategy in 2018 to balance the development of all product lines. Huawei will have a chance to register a production volume more than 173 million units for 2018, taking a market share of 11.6%, it said.

In 2017, OPPO and Vivo have continued their impressive performance with annual growth of 13% and 17% respectively in production volume, taking the fourth and fifth place in the global ranking, according to TrendForce.

The growth momentum of both brands has benefited from the growth of China market, together with the high specification of their most models, they will face narrower room for profit growth and heavier pressure for growth in 2018 as the prices of key components rise. But faced with the saturated domestic market in China, the smartphone productions of OPPO and Vivo in 2018 are expected to drop by 5% respectively compared with 2017. Therefore, both OPPO and Vivo have been actively involved in the development of overseas markets. In addition to India and Southeast Asia, they have also entered the European market in order to maintain high market share in emerging markets, TrendForce said.


In particular, Xiaomi registered 93 million units in smartphone production for 2017, showing a considerable annual growth of 83%. Last year’s ranking also put Xiaomi closely after Vivo. TrendForce expects that Xiaomi will continue the positive growth, and the production volume of Xiaomi is expected to reach 107 million units, 15% higher than in 2017. Xiaomi also has a chance to surpass OPPO to take the 4th place in the global market share ranking. However, Xiaomi is also faced with rising component costs and higher tariffs in India, which may impact its sales in the future, according to TrendForce.

Lenovo, ranking the 8th, will have a chance to record 52 million units in smartphone production this year, the same as that of 2017. Transsion brands, ranking 9th, also had an impressive performance in emerging overseas markets in 2017 and will continue the growth overseas this year. The annual smartphone production of Transsion is expected to grow by another 10 million units, reaching 50.7 million units in total in 2018, the research house said.

ASUS and HTC smartphone production expected to shrink in 2018

On the other hand, ASUS and HTC have experienced a sharp decline in the production volume in 2017, both of which recorded a total production of less than 10 million. ASUS used to have impressive sales in Southeast Asia, but it has been losing the market shares influenced by the aggressive expansion of OPPO, Vivo and other Chinese brands. Therefore, it will be difficult for ASUS to reverse the downward trend in 2018. Coupled with the significantly increased share of outsourcing this year, the total production of ASUS will be reduced to less than 8 million units. The outsourcing will also make it hard for both brands to continue the advantages of technology and design in their previous self-developed products, TrendForce said.

HTC sold its R&D personnel to Google in 2017, which will be formally separated on January 31, 2018. This has weakened its advantages in product development and design. Apart from the new flagship model that has been designed and will be released at the end of 1Q18, other new models of HTC will probably rely on outsourced OEM, making the production volume lowers. HTC will target at a production volume of 2 million units, it noted.

All-screen and dual-camera to be mainstream specification

Smartphone brands will continue to enhance the user experiences in 2018, with development focusing on 18:9 all-screen, dual-camera, etc. In terms of biometric recognition, iPhone will continue to feature Face ID, Samsung will focus on iris recognition, while other brands will use mainly capacitive fingerprint sensors due to existing technical barriers. Android smartphone models with under-display fingerprint or 3D sensing will not enter mass production until the second half of 2018, according to TrendForce.


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