The impact of the ongoing economic crisis on the smartphone market remains pronounced. Recent research indicates a continued decline in global smartphone production. In the first quarter of 2023, production decreased by 6.6 percent to 272 million units, followed by another significant decline of approximately 20 percent in the second quarter.
The first half of 2023 saw the sale of only 522 million smartphones, marking a 13.3% drop compared to the same period last year. These figures represent the lowest levels recorded in both quarterly and semi-annual periods over the past decade.
Reasons Behind the Drop in Production
Analyst firm TrendForce has identified three primary factors contributing to this production decline: China’s Easing Pandemic Restrictions Fail to Boost Demand: Despite China’s relaxation of pandemic restrictions, smartphone demand has not rebounded as expected.
Emerging Indian Market Underperforms: The promising growth in the Indian smartphone market has yet to materialize as initially projected.
Economic Crisis Affects Consumer Spending: The ongoing economic crisis has led to reduced consumer spending on smartphones worldwide.
Leading Manufacturers Face Challenges
Samsung, the leading manufacturer, shipped 53.9 million units in the second quarter of 2023, marking a 12.4% decrease compared to the first quarter. Faced with global economic challenges, intense competition, and the waning impact of flagship phone launches earlier in the year, Samsung’s second-quarter performance fell short of the previous year. The forthcoming release of new foldable models in the third quarter is unlikely to significantly affect sales due to Samsung’s relatively small share of the overall smartphone portfolio.
Apple typically experiences a weaker second quarter of production due to the transition between generations. Production volume in the second quarter decreased by 21.2% to 42 million units. The upcoming iPhone 15/15 Plus may encounter issues related to weak CMOS sensors, potentially affecting performance in Q3. Annual production estimates for Apple and Samsung are closely matched. The success of the iPhone 15 series could potentially allow Apple to overtake Samsung’s long-standing market leadership.
Efforts to Increase Production
Xiaomi reported cumulative shipments of 35 million units for Redmi and POCO smartphones, reflecting a 32.1% increase. Forecasts for the third quarter anticipate stable sales.
Oppo, Realme, and OnePlus capitalized on increased demand in Southeast Asia and other regions, collectively selling approximately 33.6 million smartphones, up 25.4% from the first quarter. Oppo’s production is expected to grow by 10-15% in the third quarter, primarily driven by shipments to Chinese, South Asian, Southeast Asian, and Latin American markets.
Transsion, encompassing brands TECNO, Infinix, and Itel, secured fifth place in the global smartphone manufacturer rankings, surpassing Vivo for the first time with 25.1 million units shipped. Compared to the first quarter, revenue growth reached a remarkable 71.9%. Transsion’s substantial production volume resulted from customer restocking, new product launches, and its expansion into mid-range and high-end markets. The company’s growth is projected to continue throughout the third quarter.
Vivo and iQoo approach the market cautiously amid the global economic slowdown, as evidenced by their conservative production plans. Vivo shipped 23 million units in the second quarter, reflecting modest 15% quarterly growth but retaining its top position in the global rankings.
Challenges Ahead
Demand in consumer markets such as China, Europe, and North America has yet to exhibit significant recovery. Even with improved economic conditions in the Indian market, reversing the global smartphone production decline remains a formidable challenge. TrendForce predicts that smartphone production may further decline in the second half of the year due to the unfavorable current economic outlook.