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Smartphone Production Fell to About 289 Million Units for 3Q22 as Demand Was Not Sufficient to Offset Inventory Pressure and Economic Headwinds

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According to TrendForce's latest research, global smartphone production totaled around 289 million units for 3Q22, showing a slight QoQ drop of 0.9% and a YoY drop of 11%. The smartphone market thus exhibited an extremely weak demand situation as the "iron law" of positive growth in the third quarter was broken after being in effect for years. The contraction of smartphone production during this year's peak season was mainly attributed to smartphone brands giving priority to consumption of channel inventory for whole devices and maintaining a fairly conservative production plan for 3Q22. Moreover, they had kept lowering their production targets due to strong global economic headwinds.

Regarding the performances of the major smartphone brands in 3Q22, Samsung posted around 64.2 million units in device production, showing a QoQ increase of just 3.9%. This was the result of the brand scaling back production since 2Q22 and maintaining a conservative outlook on the future market situation. Due to persistent inventory pressure, Samsung is expected to again post a QoQ decline for 4Q22. In the aspect of product development, Samsung has been the leader in foldable smartphones. This year, the global market share of foldable smartphones is estimated to reach 1.1%; and within this segment, Samsung is expected to hold a market share of almost 90%. As for 2023, the global market share of foldable smartphones is forecasted to climb to 1.5%, and Samsung is forecasted to retain a market share of almost 80% in the segment.




Apple posted 50.8 million units in iPhone production for 3Q22, showing a stable growth trend. Apple had benefited from the reallocation of the demand that were originally going to Huawei's smartphones as well as the optimal pricing for the new iPhone models, Furthermore, the third quarter is usually the production ramp-up period as Apple intends to push sales of the new iPhone models to their peak in the fourth quarter. Following the release of the iPhone 14 series, much of the demand for the new iPhone models has been tilted towards the Pro subseries. Accordingly, Apple has also adjusted the share distribution of the different new models in iPhone production. However, Foxconn's EMS base in the Chinese city of Zhengzhou has recently experienced a drop in capacity utilization rate due to a local COVID-19 outbreak. Since the base is also Apple's main site for manufacturing the iPhone Pro models, this incident will impact the total iPhone production in 4Q22.

Following Samsung at first and Apple at Second, the ranking of the top five global smartphone brands by production for 3Q22 is rounded out by Xiaomi, OPPO, and Vivo at third, fourth, and fifth respectively. In this ranking, Xiaomi encompasses its sub-brands Redmi, POCO, and Black Shark; OPPO includes Realme and OnePlus; and Vivo also takes account of iQoo. Among them, only Xiaomi maintained about the same device production volume compared with the previous quarter, whereas the other two recorded a QoQ drop. All of them have been constrained in raising production during the second half of this year due to the pressure to correct excess inventory. They also have to deal with COVID-19 lockdowns in the home market and the recent deceleration of India's economic growth. Moving into 4Q22, these three Chinese brands are expected to post mostly flat growth in device production.

Looking further ahead, Xiaomi, OPPO, and Vivo will be facing significant challenges. First, China as their home and primary market is already highly saturated. The enforcement of the zero-COVID policy by the Chinese government has further caused a freeze in domestic demand during the recent period. At the same time, Honor has emerged to pose a direct threat in the competition for domestic market share. To maintain growth, Xiaomi, OPPO, and Vivo will have to concentrate on overseas expansions while retaining their domestic market shares.

To Escape Fallout from US-China Dispute, Chinese Smartphone Brands Will Support Strengthening of Domestic Supply Chain by Developing Their Own Chips

Samsung, Apple, and Huawei have been self-developing chips such as mobile SOC in order to maintain a loyal group of customers and provide effective market positioning for their high-end device models. And because these three brands have been able to generate additional values with in-house components, the other major Chinese brands are now following their footsteps and committed to maintaining teams dedicated to chip design. Xiaomi, for instance, has developed the mobile SoC Pengpai S1, the imaging processing chip Pengpai C1, and the 120 W fast-charging chip Pengpai P1. OPPO, too, has unveiled a discrete ISP named MariSilicon X and is expected to introduce an in-house AP in 1Q24. As for Vivo, it has launched the V1 and V2 chipsets as solutions for optimizing the image processing algorithm of the smartphone camera. Looking at these examples, TrendForce believes that while Chinese brands are using in-house chips to raise their profiles, their more important aim is to strengthen the domestic supply chain as China and the US are now locked in an escalating geopolitical competition.

Regarding the state of the smartphone market in 4Q22, the results from the recent promotional events related to China's Singles' Day reveal that smartphone brands have not been particularly effective in spurring devices sales by lowering prices. Consumer confidence on the whole has been heavily impacted by various economic headwinds. TrendForce estimates that global smartphone production will total around 316 million units for 4Q22, translating to a QoQ growth of 9.3%. A YoY comparison will still show a decline. TrendForce points out that the smartphone market started to show signs of weakening in 3Q21. Since then, it has recorded six straight quarters of YoY decline in device production. Demand will eventually return when the correction of channel inventory is mostly completed, but this turnaround is expected to occur no earlier than 2Q23.

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Crossing my fingers that this now will result in an increase in product quality and longer support cycle, that once for all, production numbers and sales alone aren't the KPI that measures the success of a brand and the market actually inverts the tencency to create so much e-waste with this hardware.
 
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Blah blah blah

How about market prices are too high.

slash iPhone prices by 25% and probably all sell out in a month.
 
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Blah blah blah

How about market prices are too high.

slash iPhone prices by 25% and probably all sell out in a month.
The refurbished section of the Apple Store is a good place to get that discount. They put a new battery and shell on it, and it gets the same warranty. I’ve bought a few things that way. The other option is by trade-in bonuses. One time I was able to get a new 12 mini for $350 after trade-in bonuses through T-Mobile and Apple, and my trade in was a 2 year old base XR.
 
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Crossing my fingers that this now will result in an increase in product quality and longer support cycle
Hoped so at first, but then the cynic in me recalled why planned obsolescence came to be in the first place. Now I'm afraid that expected lifespans of your average phones will drop even less to stimulate demand.
Google probably can afford to extend their phone's lifecycle, but I'm not too optimistic about the rest. Even Apple might find itself in a tricky position if (when) it is forced to open the gates to the garden. Still waiting on all those acts and regulations to go into effect. Damned bureaucrats!
 
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I think what most would like to buy would be a device with battery autonomy of days or weeks. There is no need for faster CPUs.
 
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The refurbished section of the Apple Store is a good place to get that discount. They put a new battery and shell on it, and it gets the same warranty. I’ve bought a few things that way. The other option is by trade-in bonuses. One time I was able to get a new 12 mini for $350 after trade-in bonuses through T-Mobile and Apple, and my trade in was a 2 year old base XR.
Might be true for the States

Canada it’s trash for selection. Only pro models and basically starts at $1000 without the 13% sales tax. And UP TO 15% is nowhere close to 25% unfortunately.
 
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Might be true for the States

Canada it’s trash for selection. Only pro models and basically starts at $1000 without the 13% sales tax. And UP TO 15% is nowhere close to 25% unfortunately.
Agree with your comment. I have an Aristo 2+ that is 6+ years old. It runs well. I haven't even replaced the battery.
 

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You've got to love how marketing says "we ran out of reasons for you to buy a new phone every year". "Economic headwinds" - that's got to win an award or something.
 
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You've got to love how marketing says "we ran out of reasons for you to buy a new phone every year". "Economic headwinds" - that's got to win an award or something.
Indeed

just bring the prices down if you want to move products faster.
 

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Indeed

just bring the prices down if you want to move products faster.
I'm pretty sure it would hard to move inventory even at lowered prices, considering new phones are basically the same as old phones. There are no new features I want or need.
 
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I'm pretty sure it would hard to move inventory even at lowered prices, considering new phones are basically the same as old phones. There no new features I want or need.
Depends how old your current phone is, battery, etc. using a 7, 8 and two 2nd gen SEs in my family.

If I could get a new 13 mini for $600 cnd I’d buy one. Maybe two.
 
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Might be true for the States

Canada it’s trash for selection. Only pro models and basically starts at $1000 without the 13% sales tax. And UP TO 15% is nowhere close to 25% unfortunately.
The stock on the refurb store changes constantly based on what they have. You just need to check back randomly and you’ll find lesser models in there. They probably sell faster since they are one of the cheapest ways to get an iPhone without chancing it on eBay.
 
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Smartphones are losing features instead of adding, only Chinese manufacturers are bring something new, or rather replacing what's being removed.
 
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if it wasn't for the short support cycle and exorbitant prices, the market would've looked much better, innit?
 

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if it wasn't for the short support cycle and exorbitant prices, the market would've looked much better, innit?
That depends. Lower prices would move more units, that's for sure. But longer support cycles works the other way around, it makes you happy with your phone for longer. Which is why manufacturers fight that tooth and nails, despite Google doing about 4 rounds of OS overhaul in an attempt to makes OS updates and support in general as hassle-free as possible. Of course, Google offering just 3 years of OS upgrades for their own Pixel line isn't exactly raising the bar for anyone.
 
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The less electronics produced, the better. At least until humans learn to make robots that can pick apart, analyse, and sort the components of a phone, notebook, or any other piece of modern electronics, and do that with precision and in large amounts.
 
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The less electronics produced, the better. At least until humans learn to make robots that can pick apart, analyse, and sort the components of a phone, notebook, or any other piece of modern electronics, and do that with precision and in large amounts.
If that happens, then there need not be humans in the equation, neither in production nor in consumption.
 
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So, overpriced cell phones are beginning to not sell so well year after year when the worldwide economy is in the toilet... <<surprised pikachu>>
 
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