Market research firm TrendForce said worldwide smartphone shipments in the first quarter of 2016 totaled 292 million units, down 18.6 per cent from the previous quarter and a year-on-year decline of 1.3 per cent.
But the big news was that combined shipments (including exports) from Chinese brands reached 125 million units, surpassing the combined shipments from Samsung and Apple for the first time.
The decrease in overall smartphone shipments was mainly attributed to market saturation: leading brands such as Samsung and Apple no longer have the same growth momentum as before, and overall shipments depended on contributions from Chinese brands, as well as rising demand in India and other emerging markets.
Apple posted its largest quarterly decline ever for iPhone shipments, plummeting from 75 million units in last year’s fourth quarter to just 42 million units in this first quarter.
Chinese brands accounted for 42.9 per cent of the global smartphone shipments, up from 41.5 per cent in the previous quarter.
In their home market, Chinese brands benefitted from increasing subsidies for 4G smartphones from domestic telecom operators, while also gaining ground in foreign markets.
Trendforce noted that they did not suffer as steep a shipment decline as their foreign competitors did in the off-peak season of the first quarter, with combined quarterly shipments falling by only 16 per cent.
However, competition in the overseas markets as major brands struggle to keep their market shares will put pressure on Chinese vendors’ margins.
Huawei’s first-quarter shipments came in at 27 million units, a drop of around 20 per cent compared with the prior quarter, but it retained its rankings as the top brand in China and third-largest worldwide.
Huawei is ahead of its domestic competitors in terms of scale, technology, and supply chain integration, the report said, and also faces “the least amount of resistance” compared to other Chinese brands internationally.
“Huawei won’t be able to overtake Apple and become the number two smartphone brand worldwide any time soon,” said Avril Wu, a TrendForce analyst, but “the market share gap between Huawei and Apple is expected to narrow with each passing year.”
As for Xiaomi, it shipped about 16 million units in the first quarter and is now in close competition with Lenovo for the number two spot in China.
Wu said Xiaomi has created market buzz for its products by making significant hardware upgrades and turning its smartphones into platforms for the Internet of Things.
Meanwhile, Lenovo’s shipments reached 17 million units in the first quarter, a small quarterly decline of 5.6 per cent.
Lenovo wants to focus on foreign markets this year and has assigned 80 per cent of its total shipments for exports, the report said.
By the end of year, its market shares in India and Indonesia may surpass 10 per cent. However, the brand’s global market share is expected to decrease because of “insufficient product differentiation”, the report said.
Smaller companies OPPO and Vivo together will represent almost 20 per cent of Chinese branded smartphone shipments for 2016, the report predicts.
Sales of iPhone 6s have been “lacklustre” as it “lacks exciting new features”, TrendForce said, adding that Apple’s management of channel inventories have become more conservative before the launch of its next iPhone.
TrendForce lowered its iPhone shipment estimate for this year to 213 million units, an almost 10 per cent drop compared with the previous year.
Wu said: “As the budget model, iPhone SE will support Apple’s overall shipments in the second quarter before the next major iPhone release. However, it is going to face severe price competition from Chinese branded products in its target market, which is the mid-range device segment. This year’s iPhone SE shipments are projected to come in below 15 million units and they are unlikely to help turn around the weak annual shipment result for Apple.”
Samsung’s first-quarter shipments exceeded expectations and arrived at 81 million units, up 2.5 per cent from the prior quarter.
Samsung boosted its sales by launching its flagships Galaxy S7 and S7 Edge ahead of schedule and stepping up promotional activities. Additionally, the vendor’s J series, which consists of entry-level devices with high cost-performance ratios, were a success worldwide.
TrendForce raised Samsung’s 2016 shipment projection to 316 million units, which is about the same level as last year. This upward revision suggests the vendor is going to retain its market share by keeping margins low, which could mean profit may drop slightly in the next few quarters.
As for LG, TrendForce believes it has put in “a bit more effort” in developing new designs and features for its products than other companies, but still posted a slight shipment decline in this first quarter due to “escalating market competition”.