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According to the latest research by TrendForce, Chinese smartphone brands have continued the prior year’s strong growth momentum in 2017, bringing the global smartphone production to 1.46 billion units, an increase of 6.5% compared with 2016. For 2018, the growth will slow down, and smartphone makers will face heavier cost pressure as the prices of key smartphone components constantly rise. Therefore, TrendForce forecasts the global smartphone production at around 1.53 billion units, a 5% growth only.
TrendForce points out that the growth of global smartphone production in 2017 was mainly driven by Chinese telecommunication operators' subsidies to users in 4G monthly fees, together with Chinese brands' active deployment in emerging markets. In 2018, however, smartphone growth trend is coming to a plateau period despite of 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, new iPhone will improve specification and performance to increase market share
Samsung's success of its budget J (Junior) series has made up for its losses in 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 high-end market and a number of Chinese brands with Android OS.
IPhone X sparked a heated discussion in 2017, but iPhone's production volume increased by only 3% over 2016 due to the technical barriers in improving 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. In order to meet the demand in different ranges of 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.
Domestic market going saturated, Chinese brands will 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. 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 impressive performance in emerging overseas markets. In 2018, TrendForce expects Xiaomi and Transsion brands to continue the growth overseas, and the production market share of Xiaomi is expected to keep pace with OPPO and Vivo.
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.
All-screen and dual-camera will be mainstream specification for smartphones in 2018
Smartphone 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 chance to enter mass production in the second half of 2018, says TrendForce.
TrendForce is a global provider of the latest development, insight, and analysis of the technology industry. Having served businesses for over a decade, the company has built up a strong membership base of 435,000 subscribers. TrendForce has established a reputation as an organization that offers insightful and accurate analysis of the technology industry through five major research divisions: DRAMeXchange, WitsView, LEDinside, EnergyTrend and Topology. Founded in Taipei, Taiwan in 2000, TrendForce has extended its presence in China since 2004 with offices in Shenzhen and Beijing.