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China’s smartphone slump continues

Smartphone production in mainland China continued to decline in the first eight months of this year, although analysts expect Huawei Technologies’ release of new 5G handsets in spite of US sanctions to help reinvigorate the industry’s biggest market.

The country manufactured 679 million smartphones from January to August this year, down 7.5 per cent from the same period in 2022, according to data published by the Ministry of Industry and Information Technology earlier this week.

Smartphone sales on the mainland have also slowed down. Total unit volume fell 4 per cent year on year in the first eight months of 2023, according to data from market research firm Counterpoint.

In the quarter to June, China’s smartphone consumption recorded its lowest second-quarter sales figure since 2014, as macroeconomic headwinds took a toll on consumer sentiment, Counterpoint said in a report published in July. It indicated a “relatively weak performance” for handset sales during China’s 618 shopping festival last June.

The sluggish performance of the world’s largest smartphone market reflects low consumer sentiment amid the country’s bumpy post-pandemic economy recovery, which has been weighed down by the property crisis, record high youth unemployment and weak confidence in the private sector.

The market’s outlook for the rest of 2023, however, could improve on the back of the new smartphones released by Huawei and Apple, as well as the coming winter sales season, according to Ivan Lam, senior research analyst at Counterpoint.

Shenzhen-based Huawei’s Mate 60 Pro series 5G handsets have “brought great confidence” to China’s smartphone market, Lam said. Counterpoint has estimated sales of Huawei’s latest 5G smartphones to reach between five to six million units by the end of this year.

That optimistic forecast, according to Lam, comes on the back of Huawei’s large domestic base of HarmonyOS users, referring to the US-blacklisted company’s mobile operating system alternative to Android. Lam added that Huawei’s new 5G devices are expected to not only attract new customers, but draw back former users who had switched to other smartphone brands the past few years.

“Huawei has successfully recovered from a strained supply chain, and has returned to its normal rhythm for product launches,” he said.

In late August, Huawei surprised the smartphone industry when it launched a low-key presales campaign for its new Mate 60 Pro 5G handset. That was followed around a week later by another quietly executed online presales process for its top-of-the-line Mate 60 Pro+ smartphone.

Huawei’s new 5G handsets, including the newly launched Mate X5 foldable model, are powered by the same advanced, made-in-China processor – the Kirin 9000s – details of which have been kept under wraps by the privately-held company.

Recent third-party teardowns of the Mate 60 Pro have indicated that another US-sanctioned firm, mainland China’s top contract chip maker Semiconductor Manufacturing International Corp, was behind the “breakthrough” chip.

Meanwhile, Apple’s new iPhone 15 series has drawn long queues at stores in China, clearing doubts on whether the US tech giant could maintain its momentum in the country in the face of Huawei’s return and the partial ban on use of iPhones in government agencies. South China Morning Post

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