Trend: In the second half of 2023, smartphone demand will decline

Trend: In the second half of 2023, smartphone demand will decline

The third quarter (3Q 2023) saw a notable increase in smartphone production, driven by lower channel inventories and spikes in seasonal demand, according to TrendForce. The third quarter saw a 13% quarter-over-quarter (QoQ) increase in smartphone production worldwide, reaching about 308 million units. Even though this number is still below pre-pandemic levels, it is an 8.3-quarter run of consecutive annual declines that has been broken with a 6.4% YoY increase.

With the year-end shopping boom and e-commerce promotions coming up, along with smartphone brands’ usual end-of-year production surge, 4Q 2023 is expected to see a further 5–10% QoQ increase in production. It is anticipated that the worldwide production of smartphones will contract by less than 3% in 2023, with a total annual output of roughly 1.16 billion units.

Samsung remains at the top of the market by taking advantage of its dominance in the flagship smartphone segment. The company’s Q3 production increased by 11.5% to 60.1 million units. Samsung’s global reach is vast, but due to cautious planning in response to economic headwinds, the company’s lead in annual production over Apple has shrunk to just 5 million units.

Apple saw a 17.9% increase in Q3 production to reach about 49.5 million units, riding the wave of its most recent flagship releases. In contrast, Apple’s Q3 performance was negatively impacted by the 1.5% YoY decline in market share caused by the initial low yield rates of the CIS in the iPhone 15/15 Plus series. Annual production is anticipated to return to levels seen in 2022.

With Apple as its primary target, Huawei’s re-entry into the Chinese high-end smartphone market has had a significant impact. Huawei is poised to take on Apple head-on as it looks to grow its premium flagship line in 2024, concentrating on the Chinese domestic market. This approach, together with current geopolitical conditions, positions Huawei as a strong rival and is expected to have a major effect on Apple’s production output in the coming year.

As the year comes to an end, Xiaomi (including Xiaomi, Redmi, and POCO) has taken a more assertive stance in both device production and component stockpiling, following the completion of channel inventory adjustments. Thanks to the revival of the Indian market, Xiaomi’s Q3 production increased by 22.3% to about 42.8 million units, securing its position as the third-largest producer in the world. Oppo’s Q3 output increased by 15.2% to 38.7 million units, encompassing Oppo, Realme, and OnePlus. It is expected that this growth, driven by increasing sales in markets like South America and India, will continue into the fourth quarter.

Transsion, which includes TECNO, Infinix, and itel, maintained its strong performance from the second quarter into the third, producing 26.5 million units, a 5.6% increase on a quarter-over-quarter basis. Transsion was able to pass Vivo once more and take fifth place worldwide thanks to this surge. Since the second quarter, the brand has been growing its market share steadily and prospering in emerging markets. Transsion and Vivo are still fierce rivals for the top spot in the world rankings, with the latter having the potential for annual growth rates of over 40%.

With a 6.5% increase in Q3 production to 24.5 million units, Vivo (which includes Vivo and iQoo) jumped to sixth place. In response to the worldwide economic crisis, the company implemented a more cautious production plan in the first half of 2023. Throughout the year, Vivo stuck to its plan to make sure profits were consistent, even as the market in China, one of its main markets, started to improve.

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