Smartphone shipments from Chinese vendors are forecast to drop more than 30 per cent in Q1 compared to Q4 due to declining domestic demand, with low-end makers facing consolidation as prices fall.
Digitimes Research reported that the country’s tier 1 and 2 handset makers were still sitting on surplus inventories for the domestic market and small regional vendors were reporting weak demand.
The research firm said the decline started after the Chinese New Year holiday in mid-February and has shown no sign of recovery.
The push by tier 1 and 2 vendors over the past two years into the low-cost segments — CNY700-1,000 ($113-161) and CNY1,500 – has squeezed the small regional vendors, which generally target rural areas.
The number of small regional vendors dropped by about 150 from the peak of 600-700 in the first half of 2013, and DigiTimes Research said the number continues to decline and will likely fall by another 200 by the end of the year. These vendors are now focusing on the CNY300-500 segment, using low-end tri-band 4G chips from Spreadtrum.
Strong demand for Xiaomi and Apple over the past two quarter certainly had had an impact. The top five brands — Xiaomi, Apple, Samsung, Huawei and Lenova — accounted for more than half smartphone sales in China in Q4.
The China Academy of Information and Communications Technology reported in January that smartphone shipments fell 8 per cent in Q4 to 389 million units. They accounted for 86 per cent of total handset shipments.