News: Markets
11 May 2023
Smartphone shipments down 12.7% year-on-year in Q1
Global smartphone shipments totaled 268.5 million units in first-quarter 2023, down 11.1% on 302 million last quarter and 12.7% on 308 million a year ago, according to the latest Omdia smartphone preliminary shipment report.
Two of the largest OEMs, Samsung and Xiaomi, reported 18.3% and 22% declines in shipments year-on-year, while Apple remains flat with its Q1/2022 shipment levels.
Despite the large year-on-year fall that Samsung has seen, it still had the most shipments in Q1/2023, at 60 million. It has seen a small 3.2% rise in shipments from last quarter, but this is a smaller rise than it has seen in previous years with its annual Galaxy S-series. Its lead on Apple has dwindled compared to Q1/2022, from 18 million more than Apple in 2022 to just 3 million more in Q1/2023 – so it has also seen its market share fall from 24% to 22%.
After the usual fourth-quarter bump Apple recorded in 2022, its shipments have fallen back to usual levels again, remaining flat with the 57 million shipments recorded in Q1/2022. This is a 23.5% drop from last quarter but a 0.1% increase on a year ago. Despite this, Apple’s market share has increased year-on-year as a result of all other OEMs seeing declines in shipments, increasing marginally from 18% in Q1/2022 to 21% in Q1/2023. It seems that 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 that ended in Q4/2022.
“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,” says senior research manager Jusy Hong. “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 Q1 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,” he adds. “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 adds 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.”
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 Q1/2023 to fall. It recorded 31 million shipments in Q1/2023, a 22% drop year-on-year and an 8.1% drop quarter-on-quarter. The two other biggest Chinese OEMs, Oppo and vivo, also saw declines, but much smaller than Xiaomi, at 2.2% and a 11.2% respectively.
Oppo recorded 27 million shipments and vivo 21 million shipments in Q1/2023. As a result, Xiaomi’s lead over Oppo Group has diminished from 12 million in Q1/2022 to just 4 million in Q1/2023. Xiaomi’s market share has also fallen from 13% to 11%, while Oppo has risen from 9% to 10%.
While Transsion and Honor seem to have resisted the negative winds of the market conditions last quarter, both have now succumbed to large year-on-year declines. Transsion still has the sixth highest shipment figures in the latest quarter, recording 13 million units, but this is a 15.4% drop year-on-year and a 24.9% drop on last quarter. It has been dealing with a high inventory problem since second-half 2022. The issue of inflation has also seriously weakened the purchasing power of the ultra-low segment market, such as Africa, Pakistan, Bangladeshi, which is the major market of Transsion Holdings. As a result, Transsion 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 their lowest levels since the amazing growth it saw in second-half 2021 – down 26.3% to 11 million. As a result of this dip in demand, Honor has also seen a problem of high inventory at the end of 2022.
But it is Realme that has taken one of the largest falls, down 43.8% from 15 million shipments in Q1/2022 to 8 million in Q1/2023. Compared to last quarter, it fell by 27.4% from 11 million – taking it down the rankings to the ninth largest OEM by shipments.
Motorola, which has experienced a smaller drop, has hence risen to eighth largest, with 11 million units in Q1/2023, a 12.5% drop from 12 million in Q1/2022.
“The correlation that Chinese OEMs are experiencing worse market conditions than others is no coincidence,” says Zaker Li, principal analyst at Omdia. “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.”
This shrinking domestic market has also hit the recovery plans of Huawei, which has seen two consecutive quarters of shrinking shipments, following a year of growth from Q4/2021 to Q3/2022. Regardless, Huawei is still in a better position now versus a year ago, recording 6.5 million shipments in Q1/2023, up 14.3% from 5.6 million in Q1/2022.
“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,” Hong summarizes. “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 Q2/2023, before beginning to recover from the second half of this year.”
