China Smartphones in January – Big Jump

China Smartphones in January – Big Jump

China saw unusually strong mobile phone shipments in January at 40.1m units, up 50.8% m/m and up 92.7% y/y.  The 5 year y/y average growth for January is -14.5%, so January 2021 represents by far the biggest y/y increment since the data became available and the first positive January since numbers were supplied.  Of course, the assumption by the press is that this indicates that China is now in full recovery mode and has returned to the device growth that China has seen in the past, but we are a bit more cautious given the volatility seen last year.  We give some credence to the idea that Chinese smartphone consumers were buying in front of the New Year holiday, especially given that an increasing amount of device sales have been on-line rather than through brick and mortar sales, but less credence to the idea that such sales were stimulated by a large number of new smartphone models being released in China in January, as the data indicates that both overall new models and local brand new models declined 11.1% and 10.5% respectively on a m/m basis.
Another reason cited for the jump in Chinese smartphone sales was that of the new models released (see above) many were lower priced, allowing a greater base to purchase new phones.  In order to check this assumption, we looked at 53 new models that have been made available since January 1 of this year. And compared that data against last year’s total shipments by price.  We broke the data down to three price tiers (all data shows in the table) and compared each tier to the tier percentage from last year.
While we understand that the data shown below only represents only 12.9% of the year, it does give us some understanding of how new model smartphone pricing compares to last year.  Since we do not have granular data concerning new models for the January/February period last year, we converted the unit data into percentages, which allows for a better comparison.  Based on those comparisons, we can make the assumption that pricing has come down thus far in 2021, with the lowest price tier (0 - €300) showing a big jump from 68.3% to 82.3% and the highest price tier (€600 - €1000+) seeing a decline from 11.7% to 6.9%.  The one tier that did not follow the trend was the mid-tier (€300 - €600) where the share declined from 20.0% last year to 10.3% this year, however if you combine the mid and lower tiers, the aggregate (prices from 0 to €600) the share of those lower-priced models increased this year, lending some credibility to the idea that lower priced models helped to stimulate January Chinese smartphone sales.

That said, we believe that more of the jump in Chinese smartphone shipments in January is a result of a combination of the broad-based lower priced offerings, the continued increase in the share of 5G smartphone new models, which has been averaging above 50% since last October, and the increasing share of 5G smartphones as a percentage of all smartphones shipped in China, which has been just under 70% since last November.  When we take these considerations and the less traveling that Chinese citizens will be doing for this New Year holiday, we can see that consumers might want a new smartphone, especially a 5G smartphone, to communicate with relatives that are not traveling this year.  The bigger question however, is how sustainable is this bump, and with the understanding that things could change quickly, we look at Fig. 2 2020 data, and expect something similar this year, especially when looking at the long-term shipment picture shown in Fig. 4. 

China Smartphone Shipments 2019 - 2021 - 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 Smartphone Shipments - Long-Term - Source: SCMR LLC, CAIST