Figure: Figure worm
Source: 21tech
Author: Luo Yiqi
Editor: Zhang Weixian
The promotion of the Android camp in the high-end market is less than expected, and to a certain extent, it has also affected the performance of the mobile phone industry chain in the second half of 2021.
Recently, a number of mobile phone industry chain manufacturers have successively announced the results of the mention, affected by product adjustments or customer structural changes, more or less affected the company's annual revenue or gross profit margin and other financial performance.
Correspondingly, the recent supply chain information shows that the whole machine factory is also gradually adjusting the order situation to a certain extent. Of course, behind this is not only the breakthrough of high-end machines that have not yet seen obvious results, but also the overall consumer market demand is sluggish.
According to a recent report released by CINNO Research, due to the macro environment, mobile phone manufacturers began to reduce market expectations and began to reduce mobile phone supply chain orders, and to reduce the specifications and configuration of mobile phone products. At the same time, the weak demand for high-end models and the superposition of some external factors have led to a slowdown in the development of the domestic mobile phone market.
Statistics from the agency show that in February, the sales of smartphones in the Chinese market were about 23.48 million units, down 20.5% year-on-year and 24.0% month-on-month, and contracted year-on-year.
However, Lin Keyu, a senior analyst at Counterpoint, analyzed to the 21st Century Business Herald reporter that the adjustment of the supply chain is actually not a very novel thing for the entire mobile phone industry chain. "Chinese manufacturers have many years of experience in dealing with inventory management and have formed a scientific and systematic management framework. After the challenge of supply chain shortages over the past two years, any vendor is also inclined to accumulate more inventory. At present, there is indeed a situation of accumulation of high-end chips or key devices, which brings certain pressure. But it is believed that China's head manufacturers should be able to solve these problems in the first quarter. ”
Supply chains are affected
The Android camp still has a long time to explore in the process of moving to the high-end, which has even been reflected in the performance of supply chain manufacturers.
According to the 2021 annual performance report released by Sunny Optics, a head manufacturer in the camera field, the Group's revenue during the period was about RMB37.497 billion, a slight decrease of about 1.3% year-on-year. The reason is that the shipment of mobile phone lenses decreased year-on-year, and due to the impact of the downgrading of smart phone cameras, the average sales unit price of mobile phone lenses and mobile phone camera modules has decreased year-on-year.
Judging from the performance of the main business of Sunny Optics, the financial report shows that the photoelectric products business unit, which accounts for about 75.6% of the group's total revenue, has only slightly reduced its revenue by about 0.6%. However, it is pointed out that although the shipment of mobile phone camera modules increased year-on-year, due to the impact of the reduction of smart phone cameras and changes in customer structure, the average sales unit price fell by a large margin year-on-year, offsetting the revenue growth brought about by the increase in shipments.
However, the company pointed out that in the face of an unfavorable objective environment, the Group continued to promote customer structure optimization, improve research and development and process technology capabilities; completed the research and development of a number of high-specification mobile phone lenses during the year, mainly including ultra-thin ultra-small head mobile phone lenses suitable for folding mobile phones, 200 million pixels super large image mobile phone lenses, large image periscope mobile phone lenses dedicated to ultra-high-definition portrait shooting, etc.
Another lens manufacturer's earnings report also mentioned a similar trend. Qiu Ti Technology mentioned in the 2021 annual financial report that the gross profit margin of the group during the year was about 9.4%, a slight decrease of about 0.8 percentage points year-on-year, with a large decline in the second half of the year. The main reason is that the changes in external factors have a continuous impact on consumers' purchasing ability, resulting in the shipment of high-end smartphones using the Android system not meeting expectations, indirectly leading to poor applications and sales of high-end camera module products, affecting the average sales unit price and added value of related modules.
In addition, the upgrade of fingerprint recognition modules has slowed down, and the raw material prices of traditional capacitive fingerprint recognition modules and optical fingerprint recognition modules have dropped significantly, resulting in a significant decline in the average unit price of products.
Qiu Ti Technology also mentioned that in 2021, although the company's fingerprint recognition module product sales volume was about 115 million, an increase of about 24.6% year-on-year, it was significantly higher than the growth rate of global smart phone terminals in the same period. However, the growth in the number of fingerprint recognition module sales was lower than the established development target, mainly due to the poor sales of high-end smartphones using Android systems in the second half of the year, which affected the demand for optical fingerprint recognition modules under the screen.
Continuing to the beginning of this year, not only the high-end, but also the overall market in the off-season is also becoming more and more deserted.
CINNO Research believes that the external environment has changed greatly after the Spring Festival, which has brought more adverse effects to the resumption of work and production of domestic mobile phone manufacturers, which is one of the main reasons for the decline in the overall performance of mobile phones in February.
The top five brands in the domestic mobile phone market in February this year changed the trend, source: CINNO Research
It also mentioned that this year's MediaTek platform has entered the flagship market in a big way, which has also affected the flagship layout of major Android manufacturers, and it has become a new challenge to allocate R&D and supply chain resources for the dual platform. Qualcomm flagship Snapdragon 8 gen1 in Samsung OEM yield is insufficient, affecting chip supply, while MediaTek chip delivery delays, but also affected the new machine release rhythm, resulting in some product listing delays, resulting in product gaps in the February market.
High-end can not be rushed
Along with this, there is also the information that the supply chain is facing the cutting order.
Lin Keyu told the 21st Century Business Herald reporter that from the overall market, since the end of the year, the external environment has continued to change, and consumption has been affected to a certain extent, which has caused a decline in sales.
"There is indeed a gap between the original plan and the actual market response, resulting in different manufacturers for the supply chain materials have been suspended orders, or the focus point has been adjusted." He continued, for example, in the high-end market of more than 3,000 yuan, the previous forecast will be high, from the end of last year to the beginning of this year, the market launched a lot of high-end products, with the beginning of each year Apple sales will be slightly seasonal decline, Chinese manufacturers hope to seize this window of opportunity, but in fact did not achieve the expected effect, resulting in a certain accumulation of inventory in the first quarter.
Of course, from the perspective of consumption trends, this kind of customer unit price is reasonable. Lin Keyu continued that with Apple's bright performance at the end of last year, most manufacturers want to move towards high-end and hope to compete for a part of the market space. This can be seen from the current domestic mobile phone ASP from 1500-2000 yuan to 2000-3000 yuan.
In 2021, in the process of playing against the Apple camp, the Android camp did not profit
Image source: Counterpoint statistics
However, according to Counterpoint statistics, in 2021, the market share of Android smartphones with a price of more than $600 (about 3800 yuan) in China shrank from 44.6% in 2020 to 36.5%. This shows that Chinese OEMs have not succeeded in seizing the high-end market space vacated by Huawei.
At the same time, manufacturers have not given up and continue to try to target the high-end market with new strategies such as "double high-end". Rather than focusing on just one high-end product line, many Android phone brands currently have two or more high-end product lines. It also means that the $600-plus price range track has become more crowded than ever.
In general, these bring some pressure to the current supply chain situation, but in the course of more than ten years of historical development, this is actually a challenge that the mobile phone industry chain needs to continue to face. This may comprehensively test the ability of coordination and scientific management between the entire industrial chain.
"In the past, we also had to deal with abnormal conditions such as extreme weather, and Chinese manufacturers themselves had a certain resistance to supply chain management." Lin Keyu told reporters that at present, the whole machine factory does have orders or forecast adjustments to the supply chain, but this is a normal thing. For example, when Qualcomm Snapdragon's high-end chips were just released, there will also be cases of grabbing goods. At present, there is indeed some pressure on high-end chips or key devices, but I believe it can be solved soon.
According to Counterpoint, high-end smartphones must do three fundamentals: display, photography, and gaming experience.
Specifically, high-end smartphone screens need to support high refresh rates, high resolutions, and cutting-edge color accuracy; in the age of computational photography, OEMs are improving the specifications of ANC-assisted cameras. For example, mobile phones have ultra-high-resolution ultra-wide-angle cameras or periscope telephoto lenses, and high-end smartphones also focus on the collaboration between multiple cameras, which can capture more information for artificial intelligence to process algorithms; in terms of gaming experience, it will now consume more computing resources than before, which will include image quality, fluency, temperature, etc.
In addition, the agency notes that there are three conditions that are not important but are beneficial for high-end machines: reliable signal connectivity, balanced stereo audio, fast charging or battery sustainability. In addition to hardware, apple and Huawei's previous exploration of a rich ecosystem can also be learned, such as the Apple Watch can enjoy online fitness classes through subscriptions.
Editor: Lu Taoran