Article: TrendForce
Global smartphone production fell to 289 million units in the third quarter of 2022, down 11% year-on-year, according to TrendForce.
Global smartphone production totaled nearly 289 million units in the third quarter (Q3 2022), showing a slight quarter-on-quarter (QoQ) decline of 0.9% and year-on-year (YoY) decline of 11%, according to TrendForce. .
The smartphone market showed an extremely weak demand situation, as the “iron law” of positive growth in the third quarter was broken after years of operation. The reduction in smartphone production during this year’s peak season was largely attributed to smartphone brands prioritizing channel inventory depletion for entire devices and maintaining a fairly conservative production plan for Q3 2022. Moreover, they continued to lower their production targets due to strength. global economic setbacks.
As for the performance of major smartphone brands in Q3 2022, Samsung posted around 64.2 million units of device production, showing a QoQ growth of just 3.9%. This was the result of the brand’s production cuts starting in Q2 2022 and maintaining a conservative outlook on the future market situation.
Due to ongoing inventory pressure, Samsung will again decline QoQ for Q4 2022. When it comes to product development, Samsung has been a leader in foldable smartphones. This year, the global market share of foldable smartphones is estimated to be up to 1.1%; and in this segment, Samsung is expected to capture almost 90% market share. As for 2023, the global foldable smartphone market share is forecast to grow to 1.5%, with Samsung maintaining nearly 80% market share in the segment.
Apple has recorded 50.8 million units of iPhone production for Q3 2022, showing a steady growth trend. Apple benefited from the redistribution of demand that initially concerned Huawei’s smartphones, as well as optimal pricing for new iPhone models. What’s more, the third quarter is usually a period of increased production as Apple looks to boost new sales. iPhone models reached their peak in the fourth quarter.
Since the release of the iPhone 14 series, most of the demand for new iPhone models has shifted towards the Pro sub-series. Accordingly, Apple has also adjusted the stock allocation of various new iPhone models. However, Foxconn’s EMS base in Zhengzhou, China has recently experienced a drop in capacity utilization due to the local COVID-19 outbreak. Since the base is also Apple’s main site for the production of iPhone Pro models, this incident will affect overall iPhone production in Q4 2022.
After Samsung in the first place and Apple in the second place, Xiaomi, OPPO and Vivo round out the ranking of the top five global smartphone manufacturers in Q3-22, in the third, fourth and fifth places, respectively. In this ranking, Xiaomi includes its sub-brands: Redmi, POCO and Black Shark; OPPO includes realme and OnePlus; and Vivo is also considering the iQoo. Of these, only Xiaomi maintained roughly the same device production volume compared to the previous quarter, while the other two posted QoQ declines. All of them have been constrained by pressure to increase production in the second half of this year to fix excess inventories. They also have to deal with domestic market COVID-19 lockdowns and the recent slowdown in India’s economic growth. Going into 4Q22, these three Chinese brands are expected to post mostly flat growth in device production.
Looking further ahead, Xiaomi, OPPO and Vivo will face significant challenges. First, China as their home and primary market is already highly saturated. The Chinese government’s implementation of a zero-covid policy has recently caused a further cooling of domestic demand. Meanwhile, Honor poses a direct threat in the competition for domestic market share. To sustain growth, Xiaomi, OPPO, and Vivo must focus on overseas expansion while maintaining their domestic market shares.
Samsung, Apple and Huawei are independently developing chips such as mobile SOC to maintain a loyal customer base and ensure effective market positioning for their high-end device models. And as these three brands have been able to create additional value with in-house components, other major Chinese brands are now following in their footsteps and committing to maintaining dedicated chip design teams. For example, Xiaomi has developed a mobile SoC Pengpai S1, an image processing chip Pengpai C1 and a 120W fast charging chip Pengpai P1. OPPO has also introduced a discrete ISP called MariSilicon X and is expected to introduce an in-house AP in Q24. As for Vivo, it launched the V1 and V2 chipsets as solutions to optimize the image processing algorithm of the smartphone camera. Looking at these examples, TrendForce believes that while Chinese brands are using domestic chips to raise their profiles, their more important goal is to strengthen their domestic supply chain as China and the US are now locked in growing geopolitical competition.
As for the state of the smartphone market in Q4 2022, results from China’s recent Singles Day promotional events show that smartphone brands have not been particularly effective in boosting device sales by lowering prices. Consumer confidence has generally been hit hard by various economic headwinds. TrendForce estimates global smartphone production to reach around 316 million units in Q4 2022, representing 9.3% QoQ growth. A year-on-year comparison will still show a decline. TrendForce notes that the smartphone market has started to show signs of slowing down in Q3 2021. Since then, it has seen device production decline six quarters a year. Demand will eventually return once the channel inventory correction is largely complete, but this turnaround is not expected to occur until Q2 2023.
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