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Knock for smartphone market as shipments decline

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 07 Nov 2023
Omdia research shows global smartphone shipments declined in the third quarter of 2023.
Omdia research shows global smartphone shipments declined in the third quarter of 2023.

The worldwide smartphone market continues to face decline, as shipments slowed in the third quarter of 2023 (3Q23).

This is based on a preliminary smartphone shipment report conducted by research group Omdia, which reveals shipments totalled 301.6 million units in 3Q23 − a 0.7% decrease compared to 3Q22.

The data is in line with that of market research firm IDC, which shows smartphone shipments declined 0.1% year-on-year to 302.8 million units in 3Q23, according to its worldwide quarterly mobile phone tracker.

The Omdia report highlights that 3Q23 marked the ninth consecutive quarter of year-on-year declines in overall smartphone shipments, following strong smartphone shipment gains over the period of the COVID-19 pandemic, between 4Q20 and 3Q21.

“The market has not been able to keep pace with that expansion, as a range of challenges have rocked the industry and global economy, from production problems in China, to high inflation, shrinking consumer confidence and demand.”

OEM performance

Omdia states the top 10 smartphone brands for the period under review are Samsung at number one, followed by Apple, Xiaomi, Oppo, Transsion Holdings, Vivo, Honor, Motorola, Huawei and Realme.

According to the research group, for the first time this year, half of the top 10 major smartphone original equipment manufacturers (OEMs) saw growth, including Apple, Xiaomi, Transsion, Honor and Huawei.

The other half, which includes Samsung, Vivo and Realme, all saw large declines.

In July, South Korean electronics giant Samsung reported a dip in its revenue, amid a decline in smartphone shipments.

Despite the declining growth, Omdia reveals Samsung still had the most shipments in 3Q23, at 58.8 million – a 10.3% increase from the dip in 2Q23.

“This is not enough to reach shipment levels seen in 2022, though, with an 8.2% fall compared to 3Q22. As a result of this fall, and the good performance seen by many other brands, Samsung’s market share fell two percentage points, from 21% in 3Q22 to 19% in 3Q23.”

Rival Apple quickly recovered from the decline it saw in 2Q23, seeing a 23.6% increase quarter-on-quarter and 2.3% year-on-year with 53.4 million units, notes the report. Apple’s market share increased to 18% in 3Q23, up from 16% the previous quarter.

Jusy Hong, seniorresearch manager at Omdia, explains: “In China, Apple's main market, the sales situation for the new iPhone has become difficult due to the launch of Huawei's new 5G flagship smartphones and political issues. Nevertheless, Apple’s shipments in the fourth quarter and overall this year, are expected to increase compared to last year, due to the steady increase in premium demand and hardware upgrades of iPhone 15’s standard model.”

Chinese OEM Xiaomi’s market share is recovering after an extended period of falling shipments, according to the Omdia report.

“In 3Q23, it saw 41.5 million shipments, a 25% increase from the previous quarter and a 2.5% increase from the past year. It has managed to retain and strengthen its position as the third-largest OEMs globally, facing off stiff competition from other Chinese OEMs Oppo, Vivo, and increasingly, Transsion Holdings.”

Oppo Group, which includes the OnePlus brand, recorded 26.6 million shipments in 3Q23, indicating an 8.6% fall from the past year, and making it one of the smartphone OEMs that has not yet started to recover.

Transsion’s rise in shipment figures continued, increasing a further 7.3% from 2Q23, for a total of 26.3 million in 3Q23. This signals a 48.6% increase from the past year, when it saw 17.7 million units in 3Q22.

Zaker Li, Omdia principal analyst for smartphones, states: “Transsion’s rise has come after a long period of stagnation, as it was digesting the inventories from 1Q23, and as consumers had less money to spend.

“But clearly, Transsion is very ambitious going into 2024, rapidly expanding its production plan. This shows its efforts to expand into more markets could be proving successful.”

“Throughout 2023, Chinese OEMs have generally seen a worse decline than the market average,” comments Aaron West, senior analyst at Omdia.

“This could be attributed to the larger decline in the domestic market than overseas. There are other obstacles also facing Chinese OEMs. The Indian government has put in place stricter requirements for local smartphone assembly, slowing penetration of that market as Apple is making in-roads.”

Slow recovery

Omdia says following the “much-hyped and much-speculated” launch of the Huawei P60 Pro, the OEM has seen a boost in smartphone shipments.

In 3Q23, it recorded 10.7 million shipments, up 1.9 million from 3Q22, or a 24.4% increase.This makes Huawei the ninth-largest smartphone OEM this quarter following a long stint in 10th position.

“Overall, Huawei has performed well against very tough market conditions to claw back market share from its domestic competitors. It’s in a strong position to end the year on a high note, following the successful launch of its new phones.”

In 2019, Shenzhen-based Huawei was placed on a trade blacklist that restricted American companies from doing business with the major provider of network equipment and smartphones.

The sanctions hit Huawei hard since it relied on Google services and other essential technologies for its handsets.

In the South African smartphone market, Huawei has maintained strong growth, sidestepping the sanctions imposed on it and other Chinese tech firms by the US and its allies.

Hong notes: “The smartphone industry remains slightly below the shipment total we saw in 3Q22; however, there are already signs of a recovering market. Half of all major brands saw increased shipments compared to the past year, with Transsion, Honor and Huawei particularly exceeding.

“It’s therefore clearthe problems that have been facing the smartphone industry in 2023 are comingto an end; inflation is slowing globally, with consumers’ confidence also growing.

“The whole market is down 7.5% so far in 2023 compared to the first three quarters of 2022, meaning the final 2023 total is likely to be below that of 2022. But there are signals that a slow recovery is already under way.”