Trendforce report on the smartphone market in the second quarter of 2020 – an unprecedented drop of 16.7% due to Corona
According to Trendforce, many governments are easing their strict measures to contain COVID-19 to some extent and are seeking to stimulate consumer demand by providing support packages. These measures can be the basis for the potential growth of the smartphone market in the second half of the year. According to TrendForce estimates, the number of smartphones shipped in the third quarter is expected to reach 335 million units. Assuming the correctness of this prediction, the smartphone market will be associated with a quarterly growth of 17.2% and an annual decline of 10.1% (which, of course, is better compared to the 16.7% decline in the last quarter).
Next, we have a look at the status of the top brands in the market in the second quarter of 2020:
In terms of sales, Europe, America and India are the most important markets Samsung are considered. Due to the fact that the spread of Corona in these regions was very severe during the second quarter, among the top 6 brands, Samsung was more affected by the Corona virus than others. With the production of 55 million smartphone units in the second quarter, Samsung won the first place in the world as before, but despite this, it was the only brand among the top 6 brands in the world that faced a seasonal drop in the supply of its smartphones. Trendforce has announced this seasonal drop of about 16%.
Now We are in the third quarter of the year, at the same time as the tensions between China and the United States escalate (due to the Huawei embargo by the Trump administration) and also the ongoing instability of China-India relations, Samsung has increased its inventory and by targeting the lower ranks and Middle market, plans to make up for its poor performance in the previous season. According to Trendforce, an increase in Samsung’s production volume in the third quarter is not far from expected.
Company Huawei – which still It is also heavily dependent on the domestic market of China – it managed to increase its smartphone shipments to around 52 million units in the latest quarter, which represents a 13% growth compared to the previous quarter. Due to the release of new flagships of different brands in the second half of the year, the competition in the Chinese market is expected to become more intense. Since the beginning of 2019, when the US trade restrictions against Huawei became official, Huawei’s smartphone sales outside of China have fallen sharply. As a result of these actions of the US government, the research and development process for making mobile processors and also providing the required parts has become very difficult for Huawei. As we know, Huawei currently has a strong dependence on the Chinese domestic market, but we must not forget that other Chinese brands – including Xiaomi, Oppo and Vivo – also late or They will soon take over a part of Huawei’s market share.
Thanks to sales exceeding expectations iPhone SE and
Due to the support of 5G, the cost of raw materials for the iPhone 12 series will be significantly higher than the previous series models. Therefore, in order to reduce costs and stabilize the retail price, Apple has apparently decided to release new iPhones without some accessories such as wired headphones, adapters, etc. This move is expected to increase sales of new iPhones. Not to mention, the Trump administration’s recent order banning US businesses from doing business with TikTok and WeChat and their parent companies — namely ByteDance and Tencent — could affect Apple’s iPhone sales in the Chinese market in the future.
Xiaomi, Oppo and Vivo
Company Xiaomi with production of 29.5 million smartphone devices in the last quarter, ranked fourth in the world. Oppo companies (including brands Oppo, OnePlus and Realme) and Vivo also occupied the fifth and sixth positions by producing 27.5 and 26.5 million smartphones. During the second quarter, these 3 Chinese brands benefited from the recent recovery of the Chinese market. In addition, proactive inventory increases in retail channels outside of China (which occurred in the first half of this year) benefited these brands. Meanwhile, retailers filled their warehouses to a large extent, fearing disruptions caused by Corona. As a result, the quarterly growth of the smartphone supply of all three brands in the last quarter has been reported to be more than 10%.
The recent border tensions between India and China have seriously hampered the sales efforts of Xiaomi, Oppo and Vivo, as India is one of the most important foreign markets for each of these 3 brands. Of course, it should be noted that Xiaomi, Oppo and Vivo have established their presence in India for a long time. This long presence, along with the competitive prices of the products of these three brands, can safely get these Chinese companies through this difficult time, without their market share being affected. But if the relations between China and India remain tense, Chinese smartphone brands will be at a disadvantage in terms of growth.
According to Trendforce, Xiaomi, Oppo and Vivo brands will continue to prioritize the production of low-end and mid-range phones in their strategies to expand outside of China. In the long term, target markets outside of China include Europe, India, Southeast Asia, and Russia. The Chinese government has made comprehensive efforts to commercialize 5G services, and these three brands will take full advantage of this move by adopting a more proactive stance in the development and pricing of 5G smartphones.
The future of the smartphone market from the perspective of Trendforce
According to the forecast of Trendforce, by the end of 2020, a total of 1.24 billion smartphones will enter the global market. If this prediction is correct, the smartphone market will face an annual decline of 11.3% in 2020. If the corona epidemic is contained in 2021, it is hoped that the production of smartphones will grow again next year. Also, this year smartphone brands are trying to maintain their share of the market with the mass production of 5G models in the face of a sharp drop in demand. Due to the abundant supply of 5G chips by companies such as Qualcomm and MediaTek (for mid-range and high-end smartphones), it is expected that in 2020, the share of 5G phones will increase to 19.2% (about 238 million devices).