China Handset Shipments – May
Shipments of Handsets in China fell again in May to 23m units. This was down 16.4% m/m and down 32.0% y/y, against a 5 year average increase of 0.9% for May, putting shipments only 5.5% above the low for the year, which was February, typically the low point for shipments historically. We expect this trend to continue through June/July/August, which are typically relatively weak months for handset shipments in China, and pick up again in September, although our expectations for the year are for 303.48m units shipped, which would be down 1.5% y/y, even against the weak year in 2020. While the 1st quarter’s y/y comparison (up 100.2% y/y) was easy due to the onset of COVID-19 in China, the 2nd quarter comparison will be the opposite, given the snapback seen in 2Q last year, and we expect 2Q total handset shipment in China to be down 30.7% y/y at 72.2m units this year.
5G smartphone shipments declined to 16.7m units, down 22.0% m/m but up 6.8% y/y, although the share of 5G smartphones as a percentage of total handsets also declined to 72.6% from its peak of 77.8% last month, and th number of new 5G models released in May declined to its lowest level this year. We expect that the release cycle for 5G smartphones in China would account for the low number of 5G new models and weaker shipments, although component shortages might begin to slow the rate of 5G smartphone growth in the near-term. That said, we expect 5G share of total shipments in China this year to remain above 70% for the remainder of the year and new 5G model releases to pick up in September.
On an overall basis, China’s smartphone market remains lackluster, and Huawei’s (pvt) trade issues with the US, while they are less impactful on the Mainland, do have a sobering effect on smartphone demand in China. As Huawei is unable to avail itself of 5nm or 7nm process nodes, their ability to compete with other smartphone brands is muted, despite the lessened impact of limited Android services in China. Other Chinese brands continue to try to fill the gap, but to remove what was the number one brand in China from its position in its home country would be like removing the iPhone in the US. Many will migrate to other brands, but the transition is not an easy one and will opt to hold on to existing Huawei phones for a while to see if the trade logjam breaks. In the interim, the Chinese smartphone market continues to weaken.
5G smartphone shipments declined to 16.7m units, down 22.0% m/m but up 6.8% y/y, although the share of 5G smartphones as a percentage of total handsets also declined to 72.6% from its peak of 77.8% last month, and th number of new 5G models released in May declined to its lowest level this year. We expect that the release cycle for 5G smartphones in China would account for the low number of 5G new models and weaker shipments, although component shortages might begin to slow the rate of 5G smartphone growth in the near-term. That said, we expect 5G share of total shipments in China this year to remain above 70% for the remainder of the year and new 5G model releases to pick up in September.
On an overall basis, China’s smartphone market remains lackluster, and Huawei’s (pvt) trade issues with the US, while they are less impactful on the Mainland, do have a sobering effect on smartphone demand in China. As Huawei is unable to avail itself of 5nm or 7nm process nodes, their ability to compete with other smartphone brands is muted, despite the lessened impact of limited Android services in China. Other Chinese brands continue to try to fill the gap, but to remove what was the number one brand in China from its position in its home country would be like removing the iPhone in the US. Many will migrate to other brands, but the transition is not an easy one and will opt to hold on to existing Huawei phones for a while to see if the trade logjam breaks. In the interim, the Chinese smartphone market continues to weaken.
China 5G Smartphone Shipments & Y/Y Change - Source: SCMR LLC,CAIST
China 5G Smartphone Shipments & Share - Source: SCMR LLC, CAIST
China - 5G Smartphones - Share - Total Shipped & New Models - Source: SCMR LLC, CAIST
China Handset Shipments - Yearly - Source: SCMR LLC, CAIST
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