Global smartphone shipments record sharpest decline since the Covid-19 outbreak, eroding major Chinese vendors’ market share

Major Chinese smartphone vendors Xiaomi, Oppo and Vivo each lost market share in the first quarter, while Samsung and Apple extended their global lead
Smartphone shipments fell 11 per cent last quarter because of economic headwinds and sluggish seasonal demand

Smartphones

Iris Dengin Shenzhen

Published: 8:45pm, 20 Apr 2022

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Global smartphone shipments in the first quarter saw the steepest decline since the Covid-19 outbreak in 2020 amid economic headwinds and sluggish seasonal demand, further eroding the market share of China’s top three handset vendors, according to the latest industry data.

Smartphone shipments fell 11 per cent last quarter because of broad market uncertainty, according to a report on Tuesday by tech research firm Canalys, which did not provide volume numbers. That compares to the 13 per cent year-on-year drop to 272 million units in the first quarter of 2020, when disruptions caused by the pandemic wreaked havoc on worldwide smartphone demand.

“Markets saw a spike in Covid-19 cases [in the first quarter] due to the Omicron variant, though minimal hospitalisations and high vaccination rates helped normalise consumer activity quickly,” Nicole Peng, Canalys vice-president of mobility, said in the report. “Vendors face major uncertainty due to the Russia-Ukraine war, China’s rolling lockdowns and the threat of inflation. All of these added to traditionally slow seasonal demand.”

Major Chinese Android smartphone vendors Xiaomi Corp, Oppo and Vivo – ranked third, fourth and fifth in global shipment rankings – each lost market share last quarter, according to Canalys. By contrast, top-ranked vendors Samsung Electronics and Apple both gained market share in the same period.

Xiaomi’s premium smartphone, 11T, is seen inside an electronics store in Minsk, capital of Belarus. Xiaomi was the world’s third-largest smartphone vendor in the first quarter this year, according to Canalys. Photo: Shutterstock

Xiaomi, Oppo and Vivo had first-quarter market shares of 13 per cent, 10 per cent and 8 per cent, respectively. Samsung, with a market-leading 24 per cent share, unseated Apple last quarter as the world’s biggest smartphone vendor. Apple, which topped the global rankings in the December quarter, had an 18 per cent market share.

The latest global shipment rankings reflect the stiff challenges faced by major Android handset vendors in China, the world’s largest smartphone market. Apart from the global semiconductor shortage, and other supply chain disruptions, Chinese smartphone makers must deal with how the war in Ukraine has raised inflationary pressure in the world’s second-largest economy.

A slowdown in China has magnified the issue of finding an adequate supply of components for the country’s leading domestic smartphone brands. That is especially true for Oppo and Vivo, which shipped up to 70 per cent of their smartphones to their home market, according to Peng of Canalys.

“The good news is that the painful component shortages might improve sooner than expected, which will certainly help relieve cost pressures,” she said.

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iPhone 13 release sparks buying frenzy in China

China’s top smartphone vendors, however, must also contend with a long-standing adversary in their home market, Apple.

In February, Apple sales in China “surpassed that of the US for the first time since April 2020”, while gaining share from Huawei Technologies Co in the domestic market, according to a post on Twitter by Counterpoint Research.

Huawei, the world’s largest telecommunications equipment maker and formerly China’s biggest smartphone vendor, has been struggling at home and abroad because of tightened US trade restrictions imposed in 2020, covering access to chips developed or produced using US technology, from anywhere.

Areas near major iPhone plant in China under lockdown in Zhengzhou

High demand for the iPhone in China is also expected to affect Xiaomi’s domestic market share, according to Counterpoint’s tweet on Tuesday. Xiaomi founder and chief executive Lei Jun said in February that the company will focus on the high-end segment of the global smartphone market to heat up its challenge to Apple.

Still, Apple’s supply chain on the mainland could face extended disruptions caused by the Chinese government’s strict Covid-19 control measures. Local government authorities in Zhengzhou, capital of central Henan province, recently decided to place some areas in the Zhengzhou Airport Economy Zone under quarantine.

That zone is home to the world’s largest iPhone factory run by Foxconn Technology Group. Apple supplier Foxconn, however, said its manufacturing complex in Zhengzhou was operating normally amid the lockdown, according to a report by the Henan Daily.