China Smartphone Shipments – March & 1Q
Smartphone shipments in China increased by 44.4% m/m in March but declined 40.6% y/y. At 21.46m units, shipments were 4.5m units (-10.6%) below our estimate. We note that on a seasonal basis the 5 year average m/m gain for shipments in China in March has been 102.1%, after the Chinese New Year holiday which usually falls in February, so the gain in March, while it seems impressive, is the lowest gain in that month since 2017. 1Q shipments totaled 69.35m units, down 32.2% q/q and down 29.2% y/y which precludes any prediction of a near-term recovery in the Chinese smartphone market. April is typically up (5 yr. avg.) 21.8% m/m, although last year it was down 23.8% and 2Q overall is typically up 39.9% q/q (5 yr. avg.) although it was also down 22.3% last year. While our 381.24m (up 8.7% y/y) unit estimate for the full 2022 year is already under pressure, we believe it is a bit too early to make adjustments.
5G smartphone shipments in April in China were 16.19m units, up 42.3% m/m but down 41.1% y/y against a very strong March in 2021 (+82.5% m/m & +342.5% y/y) after the 2021 New Year holiday, so we get little from the single month 5G shipment data in March, although 5G share of total unit shipped remained over 75% in March and through 1Q and seems to have leveled off in a range between 70% and 80% for the last year. 62.8% of new smartphone models were equipped with 5G capabilities in March, the highest percentage since January 2021, which would indicate that the trend to bring 5G capabilities to mid and lower tier smartphones is continuing. Data from the three major network carriers in China suggests a total of 848.1m 5G subscribers at the end of March, which is more than twice the entire population of the US, but still represents a penetration rate of ~60%, with 1.6m 5G base stations (most recent update from the Chinese government) in operation.
While the scale of China’s 5G development is massive, the restrictions the US government has placed on Huawei (pvt) and ZTE (000063.CH) have given rise to the criticism that the country is more focused on expanding 5G across the broader population than providing high speed 5G, and hints from China about their plans for C-band bandwidth allocations (higher speed spectrum) have indicated that those plans have been put on hold to focus more on lower speed spectrum that can travel further than C-band. The trade limitations have also made it more difficult for carriers and smartphone brands to get the more advanced silicon needed for higher speed transport, so we expect the criticism has some truth, but also begs the question as to which path would be more valuable to the country as a whole. A densely populated city like Shanghai already boasts the fastest 5G speeds globally, with China Mobile (941.HK) having a 5G base station for every 1,056 residents in the city of 28.5m, so as 5G is pushed further into smaller cities and rural areas where signal distances are considerably wider between base stations, lower speed spectrum that travels further is the logical solution for a country that is just slightly smaller than Canada, but with almost 38x the population.
5G smartphone shipments in April in China were 16.19m units, up 42.3% m/m but down 41.1% y/y against a very strong March in 2021 (+82.5% m/m & +342.5% y/y) after the 2021 New Year holiday, so we get little from the single month 5G shipment data in March, although 5G share of total unit shipped remained over 75% in March and through 1Q and seems to have leveled off in a range between 70% and 80% for the last year. 62.8% of new smartphone models were equipped with 5G capabilities in March, the highest percentage since January 2021, which would indicate that the trend to bring 5G capabilities to mid and lower tier smartphones is continuing. Data from the three major network carriers in China suggests a total of 848.1m 5G subscribers at the end of March, which is more than twice the entire population of the US, but still represents a penetration rate of ~60%, with 1.6m 5G base stations (most recent update from the Chinese government) in operation.
While the scale of China’s 5G development is massive, the restrictions the US government has placed on Huawei (pvt) and ZTE (000063.CH) have given rise to the criticism that the country is more focused on expanding 5G across the broader population than providing high speed 5G, and hints from China about their plans for C-band bandwidth allocations (higher speed spectrum) have indicated that those plans have been put on hold to focus more on lower speed spectrum that can travel further than C-band. The trade limitations have also made it more difficult for carriers and smartphone brands to get the more advanced silicon needed for higher speed transport, so we expect the criticism has some truth, but also begs the question as to which path would be more valuable to the country as a whole. A densely populated city like Shanghai already boasts the fastest 5G speeds globally, with China Mobile (941.HK) having a 5G base station for every 1,056 residents in the city of 28.5m, so as 5G is pushed further into smaller cities and rural areas where signal distances are considerably wider between base stations, lower speed spectrum that travels further is the logical solution for a country that is just slightly smaller than Canada, but with almost 38x the population.
- China Smartphone Shipments & Y/Y ROC - 2019 - 2022 YTD - Source: SCMR LLC, CAIST
China 5G Smartphone Shipments & Share - 2019 - 2022 YTD - Source: SCMR LLC, CAIST
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