China Smartphone Shipments Drop 18% In First Quarter; Huawei Advances

Smartphone shipments in China dropped by 18% year-on-year in the first three months of 2020 to 72.6 million, the lowest total since 2013, amid fallout from the coronavirus pandemic, according to new data from research firm Canalys today.

Huawei ranked No. 1 in the world’s largest smartphone market and was the only top-five vendor to grow shipments annually – though it was an anemic 1% gain. Oppo retained second place, though shipments plunged 26%, while Vivo took third, with shipments down 19%. Xiaomi suffered a 26% year-on-year decline to remain in the top four, followed by Apple at fifth.  Apple’s shipments fell by 4% to 6.2 million smartphones; its share of shrinking overall shipments nonetheless increased to 8.5% in the first quarter from 7.3% a year earlier.  Market-leader Huawei shipped 30.1 million phones during the first quarter compared with 29.9 million a year earlier.

“The smartphone’s status as an ‘essential’ personal item has stopped the market falling further during the pandemic,” said Nicole Peng, Canalys’ VP Mobility in a statement.  Shipments were also helped by China’s well-established e-commerce channels for smartphone distribution, and the reopening of many Chinese businesses in March after earlier suspensions, Peng said.

Suppliers with the greatest financial resources, supply chain control and negotiating power with channels are recovering fastest, while smaller ones “have been brought down,” said Canalys analyst Mo Jia.

“The coronavirus crisis has pushed the market toward the top five, which now account for nearly 95% of the total market. Huawei, for example, is using its strength in the 5G supply chain, and its channel volume, to suppress its rivals. Its flagship P and Mate series smartphones are widely considered to be the only serious challengers to Apple’s iPhones at the high end, which creates momentum and positive brand sentiment to drive the rest of its device portfolio,” Mo said.

Huawei, the leader in 5G market share after six months of commercial roll-out, had some 26% of its sales from 5G network standard phones. Some 26% of Xiaomi’s shipments were also 5G standard.

Canalys said it remains cautious about the speed of recovery in China’s smartphone market this year, but is keeping its best-case scenario of 326 million shipments for 2020, including 137 million 5G smartphones.

“Rising unemployment, especially in the manufacturing, retail, travel and tourism industries, as well as the sharp decline in company revenue and profits, cast a shadow over domestic consumer confidence and spending power,” said Peng. “The macroeconomic situation is a huge red flag for China’s market players this year.”

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