Smartphone shipments slump

Shipments fall 12.7 percent from the previous year, with Samsung and Xiaomi seeing big declines, says Omdia

Shipments reached 268.5 million units in 1Q23, according to the latest Omdia smartphone preliminary shipment report. Compared to the previous year, this marks a decrease of 12.7 percent, and compared to the previous quarter, a 11.1 percent fall.

Two of the largest OEMs, Samsung and Xiaomi reported 18.3 percent and 22.0 percent falls in shipments year-on-year, while Apple remains flat with its 1Q22 shipment levels in 1Q23.

Despite the large year-on-year fall Samsung has seen, it still had the most shipments in 1Q23, reporting 60 million shipments. It has seen a small 3.2 percent rise in shipments compared to the previous quarter, however it is not enough of a rise as it has had in previous years with its annual Galaxy S-series. Its lead on Apple has dwindled compared to 1Q22, from 18 million more than Apple in 2022 to just 3 million more in 1Q23 – as such it has also seen its market share fall from 24 percent to 22 percent

After the fourth-quarter bump Apple recorded in 2022, its shipments have fallen back to usual levels again, remaining flat with the 57 million shipments recorded 1Q22. This is a 23.5 percent drop from the past quarter but a 0.1 percent increase from the same period in 2022. Despite this, Apple’s market share has increased year-on-year as a result of all other OEMs seeing falls in shipments, increasing marginally from 18 percent in 1Q22 to 21 percent in 1Q23.

It seems Apple is weathering the economic storm better than other OEMs and is recovering from the blip in its eight-quarter/two-year streak of continued growth year-on-year which ended in 4Q22.

“Due to production disruptions at Foxconn's Zhengzhou plant in December of last year, Apple was unable to supply the necessary quantities for the most important sales season, Christmas, and the end of the year. As a result, some of Apple’s production was carried over to the first quarter of this year. In order to clear inventory in major markets such as China, early this year, the company conducted a promotion to lower the selling price of the new iPhone. This resulted in year-on-year growth rate of shipments in 1Q to perform relatively better compared to other OEMs. Apple's price promotion of the new iPhone in the first quarter is very unusual. This seems to be a strategy to lower inventory to prepare for the sluggish smartphone market expected in the first half of this year.” said Jusy Hong, senior research manager at Omdia.

“Among the newly released iPhone 14 series, the Pro Max sales volume was the highest, followed by the Pro model. This seems to be the effect of the Dynamic Island display applied to both models and the steady replacement demand from the high-income class, which is relatively less affected by the economic recession.” Hong added.

Xiaomi still occupies the third spot, but impacted by tougher market conditions than other Chinese OEMs. It is still facing a big inventory problem in Latin America and the European market, with weak demand in India being another reason causing shipments in 1Q23 to fall. It recorded 31 million shipments in 1Q23, a 22 percent drop year-on-year and an 8.1 percent drop quarter-on-quarter. The two other biggest Chinese OEMs, Oppo and vivo, also see declines, however much smaller than Xiaomi, experiencing a 2.2 percent and a 11.2 percent fall respectively.

Oppo recorded 27 million shipments and vivo 21 million shipments in 1Q23. As a result, Xiaomi’s lead over Oppo Group has diminished from 12 million in 1Q22 to just 4 million in 1Q23. Xiaomi’s market share has also fallen from 13 percent to 11 percent while Oppo has risen from 9 percent to 10 percent.

While Transsion and Honor seem to have resisted the negative winds of the market conditions in the previous quarter, both have now succumbed to large year-on-year falls. Transsion still has the sixth highest shipment figures in the latest quarter, recording 13 million units, but this is a 15.4 percent drop year-on-year and a 24.9 percent drop from the previous quarter. It has been dealing with a high inventory problem since the second half of last year.

The issue of inflation has also seriously weakened the purchasing power of the ultra-low segment market, such as the Africa, Pakistan, Bangladeshi, which is the major market of Transsion Holdings. As a result, Transsion Holding is actively exploring other markets and achieving good growth in regions including the Philippines, Indonesia, and Latin American countries.

Likewise, Honor’s shipments have dipped to its lowest levels since the amazing growth it saw in the second half of 2021 – down 26.3 percent to 11 million. As a result of this dip in demand, Honor has also seen a problem of high inventory at end of last year.

But it is Realme who has taken one of the largest falls, from 15 million shipments in 1Q22 to 8 million in 1Q23, a 43.8 percent fall. Compared to the previous quarter, it saw 27.4 percent fall from 11 million – taking it down the rankings to the ninth largest OEM by shipments. As such, Motorola, who has experienced a smaller drop, has risen to be the eighth largest, with 11 million units in 1Q23, a 12.5 percent fall from 12 million in 1Q22.

“The correlation that Chinese OEMs are experiencing worse market conditions than others is no coincidence. This larger decline is happening within the context of a shrinking domestic market and India. Realme, in particular, may be hit harder by this due to its product range being primarily in the low-end price tier – and therefore demand being more elastic than OEMs occupying the higher-end of the smartphone market.” said Zaker Li, Principal Analyst at Omdia.

This shrinking domestic market has also hit the recovery plans of Huawei, who has seen two consecutive quarters of shrinking shipments, following a year of growth from 4Q21 to 3Q22. Regardless Huawei is still in a better position now versus a year ago, recording 6.5 million shipments in 1Q23, a 14.3 percent increase from the 5.6 million smartphones shipped in 1Q22.

Hong concludes: “OEMs’ shipments have fallen again, as forecasted by Omdia, with the few predicted to increase quarter-on-quarter seeing disappointing figures, particularly Samsung following the launch of the S23 series. The key global economic problem facing the smartphone industry remains inflation, and the resulting squeeze on wage packets and the economy. The problem of high inventory levels is slowly lifting, although the low consumer demand is extending this problem longer than predicted. Our forecast shows that it is likely that the smartphone market will reach the bottom of this dip in the market in 2Q23, before beginning to recover from the second half of this year.”