In 2022, mobile phone shipments fell to a ten-year trough, why are consumers reluctant to buy?

Per reporter: Wang Jing Per editor: Wen Duo

In the past year, the smartphone industry has experienced an unprecedented "cold winter", and even a leading manufacturer like Apple is difficult to "stand alone".

On January 29, the quarterly mobile phone tracking report released by international data company IDC showed that in the fourth quarter of 2022, China's smartphone market shipped about 72.92 million units, down 12.6% year-on-year. Throughout 2022, China's smartphone market shipped about 286 million units, down 13.2% year-on-year, the largest decline on record.

It is worth noting that China's smartphone market shipments in 2022 have also fallen below 300 million units after 10 years, after only 2012 domestic smartphone shipments were less than 220 million units.

When it comes to why shipments have fallen into the "freezing point", the outside world may first blame the epidemic. However, Guo Tianxiang, senior analyst at IDC China, pointed out that the impact of the epidemic is only "worse", after all, before the outbreak of the epidemic in 2020, China's smartphone market has begun to decline continuously. Therefore, the main reasons for the continuous decline of China's smartphone market are still concentrated in the following aspects: market saturation and longer replacement cycles; Technological development has encountered bottlenecks and insufficient innovation of new products; 5G push is lower than expected and lacks new killer applications; Product quality is getting better and better, excess performance and other factors.

So, can China's smartphone market rebound in 2023?

Terminal market demand is sluggish, and folding screens become highlights

In recent years, the ranking of the top mobile phone manufacturers has been relatively stable, and the market competition in the first echelon has become more intense. For the full year of 2022 and the fourth quarter, the market performance of the top five smartphone manufacturers is as follows.

With the offline market performance of the X series and the online growth of its sub-brand iQOO, vivo maintained the first domestic market share in 2022, ranking second in domestic market shipments in the fourth quarter.

With the gradual improvement of the product line layout, Honor became the only brand among the top five manufacturers to achieve year-on-year growth (34.4%), and the total shipment volume for the whole year rose to the second place and ranked third in the fourth quarter.

It was followed by OPPO, with third total shipments for the full year 2022, while fourth in the fourth quarter.

Apple's total shipments in the domestic market ranked fourth, with a year-on-year decline of 4.4%, but it was already the head brand with the smallest decline, and other manufacturers had double-digit declines. Moreover, with the release of the new model iPhone 14 series, Apple ranked first in the domestic market in terms of shipments in the fourth quarter.

Xiaomi ranked fifth in both the fourth quarter and the full year. The brand has significantly improved in the high-end market of the price segment above 4,000 yuan, but the main force driving Xiaomi's shipments in the fourth quarter is still the Redmi digital series.

In the face of a sluggish market, in the past year, major mobile phone manufacturers have taken turns in supply chain, self-developed chips, operating systems, intelligent interconnection and other fields, trying to find differentiated breakthroughs.

Among them, OPPO has established the development path of "three core technologies", namely the self-developed chip Mariana, the cross-end system Pantanal, and the pan-terminal intelligent cloud "Andean Intelligent Cloud" that serves individuals, families and developers.

Honor Optimization Software System launched MagicOS, an all-scenario operating system, trying to achieve cross-device (mobile phone/tablet/computer, etc.), cross-system (Android Windows), and cross-ecosystem (Matter OLA) compatibility.

vivo continues to improve its imaging capabilities on the flagship X series and launches a new system, OriginOS 3, to improve the smoothness of the operating system.

Compared with the "cold winter" of demand for straight plate machines, the performance of the folding screen market is one of the few bright spots.

IDC data shows that in the fourth quarter of 2022, China's single-quarter shipments of folding screen products reached a new high, with shipments exceeding 1.1 million units, and annual shipments of nearly 3.3 million units, a year-on-year increase of 118%, a higher growth rate than expected. Among them, vertical folding products are especially favored by female users due to their convenient portability and cheaper prices, and the share of vertical folding products has accounted for 42.3% of the folding screen market in 2022.

Since its launch in 2018, after years of brewing and exploration, folding screen mobile phones have now passed the concept stage and entered the growth stage of "from 1 to N" from 2022. In recent years, major Android brands including Samsung, Huawei, Xiaomi, OPPO, vivo and Honor have successively released their own folding screen mobile phones, and formed a dual flagship product strategy of straight board machine + folding screen.

In terms of product prices, the pricing of new machines is gradually declining, with Huawei Pocket S as the representative of the upper and lower inner folding screen mobile phones entering the 6,000 yuan price range, and the Honor Magic Vs and OPPO Find N2 internal folding folding screen mobile phones entering the 8,000 yuan range, which helps to increase the market acceptance and penetration rate of folding screen mobile phones.

In terms of product experience, the weight of folding screen mobile phones is declining. The inner folding mobile phone before 2022 is generally close to the weight of 300g, but the folding screen mobile phone released in 2022 generally controls the weight at about 260g, close to the weight of the straight board, and OPPO's newly released OPPO Find N2 last month even weighs 233g, lighter than the 240g of the iPhone 14 Pro max.

After entering the explosive growth stage, many institutions expect that the future market space of folding screen mobile phones is considerable. DSCC expects that folding screen mobile phones will become the fastest growing segment of the consumer electronics industry, and the market space will grow from $22.2 billion in 2021 to $88.8 billion in 2024, with a three-year compound growth rate of 58.74%, and the market space will exceed $105.3 billion in 2025.

What is the outlook for the mobile phone market in 2023?

It is undeniable that the current folding screen mobile phone is still in the form of niche products, and whether the larger straight plate machine can rebound significantly in 2023 has attracted much attention from the outside world.

In this regard, Guo Tianxiang believes that it is necessary to continue to observe. "At present, market demand has not rebounded significantly, and the traditional sales season before the Spring Festival has not reached the level of the same period last year; The situation of manufacturers and supply chains is also relatively conservative, and there is no increase in the annual target or additional orders, so at least in the first half of this year, China's mobile phone market will not rebound much, and the situation in the second half of the year also depends on how the economy, consumer confidence and other aspects recover after the epidemic. This year's market situation should be similar to last year, basically the same, maybe a little more or a little less, but it is difficult to have a significant rebound. Guo Tianxiang said.

In terms of advice to mobile phone manufacturers, he further continued that major brands should still maintain a conservative and pragmatic operation strategy, ensure low inventory, and avoid aggressive and large increase in shipments. At the same time, we should also consider continuing to expand overseas markets, especially in countries and regions with greater development potential, and pursue high profits.

Oriental Wealth Securities pointed out that the bottom of the current consumer electronics cycle has appeared, and it is necessary to wait for a new round of force in 2023. "On the demand side, unlike the multi-party stimulation of '5G penetration rate increase' + 'TWS headset large items' + 'online office demand' in 2019~2021, the demand side is expected to achieve the resonance of 'mandatory' replacement demand caused by the recovery of consumer willingness suppressed by the epidemic and the insufficient performance of smartphones in 2023."

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