The mobile phone market was under pressure in the first quarter: how do manufacturers line up?

21st Century Business Herald reporter Ni Yuqing reported from Shenzhen

In the first quarter of 2022, the mobile phone market was "cold and fluttering".

Globally, Canalys' first-quarter report pointed out that due to the impact of poor economic conditions and seasonal demand downturn, global smartphone shipments fell by 11% year-on-year; domestically, according to data released by CINNO Research, the sales of smartphones in the Chinese mainland market in the first quarter were about 74.39 million units, down 14.4% year-on-year, and the top three were OPPO, Glory and vivo, of which Glory, which spent the darkest hour last year, bucked the trend and increased by 176%.

The original first quarter is the off-season of mobile phones, repeated epidemics have weakened terminal demand, the replacement cycle has been further extended, and then superimposed on the structural shortage of semiconductors, these factors will continue to affect the market throughout the year, and the management of the supply chain of manufacturers has become more complex.

Recently, Honor CEO Zhao Ming said in an interview with 21st Century Business Herald and other media reporters: "(No matter how external factors should be affected), it is a growing market space for Glory, and the domestic full range of gear layout is basically completed." Judging from the domestic data in February, March and April, there was indeed a year-on-year decline. Consumers are more picky about the products they buy, and we are not struggling with how the market is and the consumer replacement cycle has become longer, but we continue to improve the products. ”

Market Volatility: How Supply Chains Can Improve Resilience

This year's changes in the external environment and the impact of the epidemic on the pace of production have cast a shadow on the reshaping of the supply chain. On the supply side, there are problems such as raw material price increases, device shortages, and logistics obstructions; on the demand side, global inflation is more serious, which has a greater impact on the consumer side, especially last year's demand experienced overdraft, and the consumer terminal demand in 2022 further declined.

Wang Xiaoya, senior analyst of the mobile division of Sigmaintell, told reporters that due to global inflation, repeated domestic epidemics, and the continuous impact of international geopolitics, global demand for smart phones is weak, and according to Qunzhi Consulting data, it is expected that the overall global demand for smart phones will be reduced from 1.35 billion to 1.3 billion in 2022.

"The past year is the most challenging year in the history of Glory, the environment is more challenging than five years ago, eight years ago, the epidemic is more test of the flexibility and resilience of the supply chain," Song Yiwen, director of the Glory Supply Chain Management Department, told the 21st Century Business Herald reporter, "On the one hand, Glory and the industrial chain partners together to innovate technology and maintain long-term cooperation, on the other hand, in the face of the epidemic, Glory has done a lot of work since independence, in the park protection and epidemic prevention and control, special logistics solutions, supplier layout, A lot of preparation has been made in the layout of the region and the layout of imports and exports, which is a very complex system engineering. ”

Song Yiwen further said that for example, in the region, the Layout of the Yangtze River Delta and the Pearl River Delta, both domestic and overseas. On the vendor side, the layout of the backup supplier has also done a lot of work to avoid the impact of the epidemic in a certain place in the short term, and the layout includes multiple partners of a certain type of device, rather than a single partner.

In terms of logistics layout plan, there are also multi-port processing programs and capabilities, "in Hong Kong, Shenzhen, Guangzhou, Shanghai can have the ability, these capabilities are shared among partners, in the case of A supplier, take a certain product, through the glory of the ability to dredge the path for resource sharing." We did a number of backup solutions, including the sea freight plan, and even studied the air freight plan from Hong Kong to Shenzhen. Even for a few kilometers, these options can be flexible in the event of an outbreak. Song Yiwen said.

In addition to the epidemic, the supply of upstream components is also the focus of attention, a number of industrial chain people told reporters that some devices in the case of declining demand, there is a situation of supply and demand impact offset, but structural shortages still exist.

In this regard, Song Yiwen said: "The overall situation has been alleviated, but the tense situation has not been completely eliminated. Honor will not be blindly optimistic about the industry, because the cycle from supply and demand tension to action to effect is very long, and do not change the strategy because of short-term behavior. We still firmly believe that there are still great challenges in the industry, and in special areas, especially in the field of new technologies and high-end technologies, resources are still tight, or we should be cautious. ”

For example, he said, the supply of memory chips is tight, display, camera and other chips will be more generous, on the whole, involving high-end will be more tense, especially involving advanced processes, such as 4 nanometers, 5 nanometers, the more advanced processes the more nervous.

Whether it is the epidemic or upstream supply, it has increased the uncertainty of the supply chain, and mobile phone manufacturers have also carried out long-term planning and advance layout to enhance the flexibility and control of the supply chain.

Increased competition: Who dominates the domestic market

In the complex and changeable environment, the opportunity space left for small manufacturers is further reduced, and in the global and domestic markets, it is basically a multi-level battle between giants. From the perspective of the domestic market, the seat pattern of the top five is still changing, and the current glory is the key variable.

According to CINNO Research data from the monthly data in March, the sales of smartphones in the Chinese mainland market were about 20.04 million units, a year-on-year decline of 24.7%, compared with the month-on-month decline of 14.6% in February, and the situation of double contraction continued again. In the downward trend, Honor ranked first with 3.5 million units sold, an increase of 143.6% year-on-year, while OPPO, Vivo, Apple and Xiaomi ranked second to fifth, respectively.

Since last year, every quarter and every month, the competitive landscape of mobile phones has been constantly changing. Zhao Ming said: "In the mobile phone industry, consumers and the industry side have given us an unabated pressure, every day. Maybe a month ago the products that sold particularly hot came to the next quarter, the heat came down, and the products that everyone grabbed everywhere became inventory, and every day was trembling and walking on thin ice. ”

After operating independently, Glory is accelerating to complete the quadrant of each ability. On the one hand, Glory maintains investment in R&D and innovation, Zhao Ming said: "The company now has 12,000 people, R & D personnel account for more than 50%, R & D personnel will always maintain more than 50% of the proportion, we will continue to carry out technological innovation." ”

On the other hand, supply chain cooperation and intelligent manufacturing foundations guarantee the supply of mobile phone production capacity. For supply chain cooperation, Honor maintains an open attitude, and Honor adopts a combination of self-built and foundry to form its own manufacturing matrix. Among them, the Glory Intelligent Manufacturing Industrial Park in Shenzhen's Pingshan District has been put into use, mainly focusing on high-end machine production. For example, the rapid introduction of folding screens and the multi-main camera fusion computing photography technology of Glory are all supported by innovation in the manufacturing process.

Taking computational photography as an example, Song Yiwen introduced that the proofreading and algorithm coincidence of each camera is two or two, and more than twice the equipment and fully automatic algorithm process are invested than in the past, each test process has more than 100 test contents, and the test process and result data will be reflected in the big data through the equipment, and once there is an abnormal problem, it can be quickly found and processed.

From technological innovation, industrial chain, and then to channels, the competition between mobile phone manufacturers is more intense, especially in the high-end market. In addition to glory, OPPO, vivo, millet and other manufacturers are also increasing investment, including self-developed chips, supply chain in-depth cooperation, folding screen competition, everyone is aiming at Apple, for positive competition.

In the case of complete products and high maturity of the industrial chain, manufacturers hope to further move towards high-end, enhance profits, and have more R&D capital to invest in innovation. However, it should be pointed out that high-end is not a high price, price is a necessary condition, and the improvement of brand degree and sense of identity cannot be achieved overnight. In Zhao Ming's view: "In the face of this era, we can only face difficulties, and Glory is still a company that grows and expands." In the future, it is still necessary to continue to solve consumer pain points, and it is meaningless to simply show parameters and skills. ”

Next, how to maintain the growth momentum of domestic mobile phone manufacturers under the challenge of many parties, improve their core competitiveness through innovation, and seize more space upwards, and the market will have a new interpretation.