In recent years, the biggest trend of smartphone camera modules is the increasing number of rear camera modules, according to TrendForce’s investigations. According to TrendForce research, triple camera modules surpassed dual camera modules to become mainstream in 2020 and drove the continued growth of smartphone camera module shipments. Annual smartphone camera module shipments in 2022 are expected to reach 4.92 billion units, or 2% growth YoY.
However, the trend towards multiple cameras started to shift in 2H21 after a few years of positive growth. The previous spike in the penetration rate of four camera modules was primarily incited by mid-range smart phone models in 2H20 when mobile phone brands sought to market their products through promoting more and more cameras. However, as consumers realized that the macro and depth camera usually featured on the third and fourth cameras were used less frequently and improvements in overall photo quality limited, the demand for four camera modules gradually subsided and mobile phone brands returned to fulfilling the actual needs of consumers. In addition, increases in the pricing of semiconductor chips such as PMICs and Driver ICs, as well as increased shipping costs, have driven the cost of mobile phones up sharply. Without the ability to effectively pass this cost onto consumers, any remaining allowance to economically install low-end cameras has been effectively eliminated.
Camera resolution upgrades: fastest growing market share encompasses 49-64 million pixel cameras
Although camera shipment growth has slowed, camera resolution continues to improve. Taking primary cameras as an example, the current mainstream design is 13-48 million pixels, accounting for more than 50% of cameras in 2021. In second place are products featuring 49-64 million pixels which accounted for more than 20% of cameras last year with penetration rate expected to increase to 23% in 2022. The third highest portion is 12 million pixel products, currently dominated by the iPhone and Samsung’s flagship series. However, a 48 million pixel primary camera is expected to be introduced to the iPhone 14 Pro series (tentative name) that Apple will release this year, further reducing 12 million pixel products to a 15% share in 2022.
In addition to the original Samsung and Xiaomi brands employing 108 million pixels cameras, Vivo and Honor also introduced similar resolution cameras in 2021. There is a chance 200 million pixel products will be ready for commercial use in 2022, driving the penetration rate of ultra-high pixel products to an expected level in excess of 5% in 2022. However, such ultra-high pixel products primarily focus on enlarging photographs without losing image quality. Therefore, TrendForce believes that any marginal benefits these products bring to consumers will gradually decrease and the penetration rate will not grow as quickly as 49-64 million pixels products.
Overall, TrendForce believes that the number of camera modules mounted on smartphones will no longer be the main focus of mobile phone brands, as focus will return to the real needs of consumers. Therefore, triple camera modules will remain the mainstream design for the next 2~3 years.
Smartphones are essential to people’s daily lives and constitute a basic necessity. TrendForce therefore expects the smartphone industry to rebound and post marginal growth next year, assuming that economic activities worldwide will mostly return to normal by then. The main trend drivers in the smartphone market next year are still going to be the usual device replacement cycle and the additional demand from emerging markets. TrendForce expects annual smartphone production for 2022 to reach about 1.39 billion units and the YoY growth rate hitting 3.8%.
Expanding market share will be very challenging for smartphone brands due to fierce competition
Samsung’s smartphone production for 2022 is expected to reach 276 million units, a 1.1% YoY growth. The company continues to reorganize and extend its product series. The integration of the Galaxy Note series with the Foldable series, the continuation of the S-Pen, etc. are some of the moves that Samsung has taken to maintain its market share in the high-end segment. Moreover, Samsung has increased the outsourcing portion of its device manufacturing in order to make its mid-range and low-end models more cost competitive. However, advances in device design and manufacturing will only intensify the competition in developed markets. In the emerging markets, demand will continue to concentrate on entry-level models. Hence, Samsung will have increasing difficulty in growing its market share as most of its offering do not target the demand for entry-level products. This also means that retaining market share will become more challenging for the brand.
Apple is set to release the latest model in its iPhone SE lineup (i.e., the third-generation SE), featuring a 4.7-inch display, A15 SoC, and 5G support, by the end of 1Q22. Other than these features, the rest of the new SE’s hardware specifications will be similar to those of the second-gen SE. In this regard, the new SE can be seen as an invaluable asset with which Apple attempts to enter the mid-range 5G smartphone segment. In 2H22, the company will keep to its tradition of announcing four new models, two of which will feature a 6.1-inch display, while the other two will feature a 6.7-inch display. Although the release of these five new handsets will likely help Apple increase its market share next year, this increase will be constrained by the fact that Apple will have to raise the retail price of its smartphones in order to keep up with rising component prices and ensure some profitability. TrendForce therefore expects Apple’s smartphone production for 2022 to reach 243 million units, representing a 5.4% YoY growth and the second highest volume among all smartphone brands.
Given that demand will unlikely increase by a significant margin in the domestic Chinese smartphone market next year, the three major Chinese brands, including OPPO, Xiaomi, and Vivo, will primarily depend on overseas sales for their smartphone market share growths. It should be pointed out that TrendForce’s calculation of Xiaomi’s production volume also includes handsets released by the brand’s subsidiaries Mi, Redmi, POCO, and Black Shark. Thanks to Xiaomi’s relatively early expansion in the overseas markets, as the global spread of the COVID-19 pandemic is gradually brought under control, Xiaomi is expected to benefit the growth of its overseas sales and register a smartphone production of 220 million units, representing a 15.8% YoY growth and the third highest volume among all brands.
Fourth-ranked OPPO sells its smartphones globally under three brands: OPPO, Realme, and OnePlus. TrendForce expects OPPO group’s annual smartphone production for 2022 to reach 208 million units, a 2.5% YoY growth. Regarding product planning, OPPO is relatively similar compared with Xiaomi, as both of these brands differentiate between various markets and client bases through subsidiaries. Likewise, OPPO has in recent years actively expanded its peripheral ecosystem businesses, such as software services and additional consumer items, in order to improve its profitability for the year. Finally, Vivo will take the fifth rank next year by producing almost 150 million handsets, a 6.4% YoY growth. This brand depends heavily on its customers’ cyclical replacement demand for its sales. Therefore, while the Chinese smartphone market, which is Vivo’s primary sales region, becomes increasingly saturated, the brand’s room for growth next year will also be relatively limited. In addition, as HONOR will also aggressively look to capture market shares in China, the production volumes of OPPO and Vivo will be further constrained next year.
Annual 5G smartphone production for 2022 is expected to reach about 660 million units despite slowing growth rate
Thanks to the Chinese government’s active push for 5G commercialization for the past two years, the global market share of 5G smartphones will likely hit 37.4% in 2021, with about 500 million units produced throughout the year. Going forward, now that the market share of 5G smartphones has surpassed 80% in China, the smartphone industry will shift its focus of 5G development to other regional markets. However, because countries vary in the progress of 5G infrastructure build-out, and 5G service plan fees are higher than 4G fees, the growth of 5G market share now appears to be slowing. As such, TrendForce expects 5G smartphone production for 2022 to reach about 660 million units, translating to a market share of 47.5% for 5G handsets in the overall smartphone market.
On the other hand, the growing market share of 5G smartphones also generates a corresponding growing demand for components. Given the increased shipment in servers, IoT devices, and EVs, foundries will find it even harder to manufacture enough components for 5G handsets since foundry capacities are already stretched to their limits. What this also means is that the market share of smartphone brands will depend on how successful they are in booking foundry capacities. Smartphone brands’ scramble for foundry capacities, however, may in turn result in overbookings or uneven allocation of capacities to components, thereby further exacerbating the mismatched availability of smartphone components. Hence, if the actual demand from smartphone buyers falls short of expectations, TrendForce believes that smartphone brands may be forced to adjust their inventories once again in 2H22.
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at firstname.lastname@example.org
Smartphone shipments in the Chinese market have seen continued declines in recent years primarily because the penetration rate of smartphones in China has already surpassed 60%. Furthermore, smartphone hardware refreshes have gradually slowed down, with no killer app has emerged yet. Taken together, these factors have led to a decline in consumers’ replacement demand. While the COVID-19 pandemic began its spread last year, annual shipment of smartphones in the Chinese market for 2020 reached only about 330 million units, a 13.61% YoY decline.
Regarding the Chinese smartphone market in 2021, quarterly shipment underwent more than a 100% YoY increase for only the first quarter of the year due to the relatively low base for comparison in 1Q20. Starting from 2Q21, smartphone shipments saw YoY declines for each quarter of 2021. TrendForce, therefore, forecasts 345 million units in annual shipment for 2021 in the Chinese smartphone market, which represents a 4.55% YoY growth and a figure that falls below prior expectations. This disappointing performance can primarily be attributed to the shortage of components from the supply side, along with continued sluggishness from the demand side domestically.
As Honor confirmed its handsets will feature GMS (Google Mobile Services), Chinese smartphone brands look to dominate the overseas markets
Honor recently announced on its official Twitter account that it once again restored its partnership with Google and other suppliers. The Honor 50 series of handsets are equipped with GMS, which includes Google Play Store, Gmail, and YouTube, among other apps.
As a subsidiary of Huawei, Honor was previously unable to install GMS on its phones due to Huawei’s inclusion on the US Entity List, leading to a continued drop in Honor’s overseas market share. Now that it has been spun off from Huawei, Honor needs to restart negotiations with its suppliers. Initially, the company had a hard time expanding its presence overseas due to the lack of GMS functionality as well as the fact that it had to re-establish its global sales networks. After having received GMS authorization from Google, Honor is now able to compete with other Chinese brands such as Xiaomi, OPPO, and Vivo on an equal footing.
Shipping more than 10% of the domestic monthly total in smartphones, Honor has recently established a steady presence in the Chinese market. However, given the domestic market’s bearish trend in recent years, Honor, whose handsets now feature GMS functionality, will likely turn its focus to the European or Southeast Asian markets that Huawei once aggressively pursued.
（Image credit: Pixabay）
The recent surges of COVID-19 cases in India, Vietnam, and other Southeast Asian countries have adversely affected the global smartphone market in terms of production and demand, according to TrendForce’s latest investigations. The global smartphone production for 2Q21 fell by 11% QoQ to a total of 307 million units. However, a YoY comparison shows an increase of around 10% for the quarter. The global production for 1H21 came to a total of 652 million units, translating to a growth rate of almost 18% compared with 1H20, when the pandemic was in the initial phase.
While fourth-ranked Apple undergoes a transition period between old and new models, and Samsung experiences a slight dip in market share, smartphone brands have improved their respective product specifications
Samsung’s smartphone production for 2Q21 reached 58.5 million units, which was the highest among all smartphone brands yet represented a 23.5% QoQ decrease. Since India and Vietnam account for the majority of its smartphone production capacity, the severe COVID-19 outbreaks in both countries during 2Q21 had a significant impact on production volume. This year, Samsung will remain as the top smartphone brand by quarterly and annual production. However, it will face increasing difficulty in preserving its steadily shrinking market share in the future. The competition will only intensify as rival brands have become excelled at smartphone design and manufacturing.
OPPO’s smartphone production fell by 6.6% QoQ to 49.5 million units for 2Q21. OPPO’s production figure includes devices from sub-brands Realme and OnePlus. Xiaomi’s smartphone production also came to 49.5 million units for 2Q21, showing a QoQ drop of 2%. Xiaomi’s production figure includes devices from sub-brands Redmi, POCO, and Black Shark. On a YoY basis, OPPO posted a growth rate of 80%, whereas Xiaomi posted a growth rate of almost 70%. The high YoY growth rates were attributed to them capturing some market share abandoned by Huawei and the recovery of China’s smartphone market. Both OPPO and Xiaomi claimed second place in the quarterly ranking. Vivo is another Chinese brand that faces a similar situation. Its smartphone production, which includes devices from sub-brand iQoo, dropped by 8.1% QoQ to 34 million units. Vivo took fifth place in the quarterly ranking. Each of these three Chinese brands has made India its second largest base with respect to production and sales operations. Hence, India’s recent COVID-19 surge affected the production and sales performances of all three brands in 2Q21.
Regarding future plans, all three Chinese brands corrected down their annual production targets at the end of 2Q21 due to the COVID-19 surge in Southeast Asia and the capacity crunch in the foundry market. Lowering the annual production target is going to alleviate the cash flow pressure by preventing the component gaps from widening and the inventory of whole devices from rising. It should be pointed out that OPPO, Xiaomi, and Vivo have been very proactive in developing innovative products in the high-end segment of the smartphone market. The high-end models from these three brands are not able to completely assume the market positions that have been held by the flagship models under Huawei’s P and Mate series. Nonetheless, all three brands have posted strong results in both the domestic and overseas markets. To capture more market share, Xiaomi and OPPO are leveraging their respective sub-brands Redmi and Realme that both offer high performance for price. TrendForce therefore believes that these two brands will be more or less evenly matched in terms of production through this whole year.
Apple’s iPhone production reached its lowest point for the year, and its rank fell to fourth place in 2Q21 because the second quarter is the transition period between last year’s and this year’s iPhone series. The quarterly total iPhone production fell by 22.2% QoQ to around 42 million units. In the aspect of product development, Apple will be releasing four flagship iPhone models this September. The major upgrades that come with the new series are the improved camera and the next-generation A15 processor that is manufactured with TSMC’s 5nm+ process. Other upgrades relate to the optimization of the existing functions. This year’s iPhone line-up can be regarded as an extension of the iPhone 12 series that was released in 2020. With regards to pricing, Apple will be maintaining its proactive approach so as to gain more market share. On the other hand, there is the possibility that Apple’s device production during 2H21 will be affected by the recent spike of COVID-19 cases in Malaysia. Due to the severity of the outbreak situation, shipments of ICs from that country have experienced delays.
With an annual production of 9.4 million units for 2021, LG officially terminated its smartphone manufacturing operations in 2Q21
LG signaled that it will be selling or shutting down its mobile phone unit at the start of this year, and then the company announced that it will formally close the mobile phone unit this April. The development of new smartphone models was also suspended. According to the shutdown plan, the production of LG smartphones has ceased since the end of 2Q21. Altogether, LG produced around 9.4 million units this year and is estimated to account for about 1% of the market share. As for LG’s regional markets, the company was focusing on expanding its presence in the respective mid-range segments of the North American and Latin American markets. With LG ceasing its smartphone production, the abandoned market share in North America will be mostly divided among Android phone brands Samsung, Lenovo, and brands owned by local telecom companies. In Latin America, Lenovo and Xiaomi will likely benefit the most from LG’s exit.
Persistent uncertainties in the pandemic’s impact may continue to affect smartphone production in 2H21
Regarding the global smartphone production for the whole 2021, TrendForce has corrected down its estimation from the previous version of 1.36 billion units with a YoY growth rate 8.5% to the current version of 1.345 billion units with a YoY growth rate of 7.3%. Going forward, one of the two main focuses of observation will be on whether the pandemic will cause a further decline in smartphone sales. For instance, while Europe and the US are currently experiencing a resurgence of infections, Southeast Asian countries have also been unable to subdue the most recent outbreaks. In addition, the pandemic continues to pose a risk to the smartphone supply chain. Take Malaysia for example. It accounts for a significant share of the global production capacity for OSAT (i.e., around 15%). With the country now becoming a COVID-19 hotspot, there have been disruptions in the supply of some key semiconductor components. This, in turn, will negatively affect smartphone production during the second half of this year.
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at email@example.com
Owing to its enormous population, Latin America has in recent years become a hotly contested market for smartphone brands. More specifically, the penetration rate of smartphones in Latin America rose from 32% in 2014 to 68% in 2020, with smartphone usage being the highest in Chile and Venezuela and lowest in Peru.
TrendForce’s investigations indicate that smartphone penetration rate in Brazil reached 72% in 2020 owing to high demand from young consumers and to the country’s massive population, the highest in Latin America. More than 85% of the 18-34 year old population group in the country consisted of smartphone owners, making Brazil the fourth largest smartphone market in the world behind only China, India, and the US. Notably, smartphone is the primary means of internet connection for most Brazilians.
With regards to smartphone brands, the Brazilian smartphone market is currently dominated by Samsung, Motorola (a Lenovo subsidiary), Xiaomi, LG, and Apple, with Samsung possessing the highest market share. Samsung’s success can mainly be attributed to its focus on customer experience. For instance, Samsung has established service centers in major cities including Sao Paulo and Campinas, where customers can not only experience the brand’s range of products, but also enjoy such value-added services as smartphone charging and free Wi-Fi, in addition to one-to-one consultation with Samsung staff.
As such, the company was able to achieve a 43.1% market share in Brazil last year. Trailing behind the Korean brand was Motorola, which took second place with a 20.5% market share. For the domestic market, Motorola’s handsets are manufactured by the Brazilian branch of global EMS giant Flex (previously known as Flextronics). Xiaomi rounded out the top three, with an 8.9% market share in 2020. Other Chinese smartphone brands such as OPPO, Vivo, and realme (the most aggressive among Chinese brands) have been entering the Latin American market since 2021.
Physical storefronts and one-stop-shop customer experiences are the keys to success in the Latin American smartphone market
Of course, entering the Brazilian market is no easy feat. TrendForce notes that some of the challenges involved with expanding in Brazil include the drastic movements of the Brazilian Real’s value as well as the country’s sky-high import duties, which have resulted in high retail prices for smartphones. Furthermore, shifts in domestic policies regarding smartphone manufacturing and online sales mean that smartphone brands must now establish domestic facilities for smartphone assembly. Apart from the high costs of domestic labor and components, Brazil’s taxes alone are able to significantly cannibalize the profitability of smartphone sales.
An appropriate case in point is Xiaomi’s 2015 venture into the Brazilian smartphone market. Xiaomi made its exit within a year of entering Brazil. Aside from the aforementioned high import duties, the company’s premature exodus took place because its online-based sales strategy was ill-suited for Brazil, where smartphone customers made purchases predominantly through major retail stores, and fewer than 20% of customers bought smartphones online.
Combined with Brazil’s prohibitive transportation costs, Xiaomi found itself unable to leverage its advantage of affordably priced handsets. Fast forward to 2019, however, as the Latin American market saw increased smartphone penetration, Xiaomi once again made its entrance, this time by focusing on developing its offline presence, including physical storefronts (called “Mi Stores”) in Colombia, Uruguay, Mexico, and Chile, which allowed it to score its first win in the Latin American smartphone market.
（Cover image source: Pixabay）