Samsung thunder, Apple can not move, 10 years rare cold wave impact mobile phone industry

Text | Yuan Silai

Edit the | Su Jianxun

For the mobile phone industry, the start of the new year is bad news.

According to the latest data released by IDC, global smartphone shipments in 2022 hit the lowest record since 2013. Shipments in China fell below 300 million units for the first time in 10 years.

What's worse, all brands, including Apple and Samsung, are declining, and the difference is only how much it falls.

Even after the start of the epidemic in 2020, Apple still had an 8% increase that year, not to mention Huawei and Xiaomi in 2019. Samsung Electronics, which focuses on chips and mobile phone businesses, came up with an ugly fourth quarter 2022 financial report, and its operating profit plummeted 69% in the quarter, hitting an eight-year low.

This will be an important moment. If shipments still do not improve in 2023, it means that the entire mobile phone industry has entered a lonely twilight. Even giants such as Samsung and Apple have been involved in the dark curtain without exception.

The downstream semiconductor industry was in trouble when mobile phones plummeted. Qualcomm and MediaTek have cut orders one after another, and even TSMC, which has always had a stable performance, is also cautious about growth in 2023.

Where is the industry headed?

Anxiety is everywhere. Especially after China's epidemic prevention is liberalized, no one can be sure where the market will go. A few years ago, according to a leading Android manufacturer supply chain employee to 36Kr, "it is still lowering (shipment expectations)".

For the mobile phone industry, when 2023 begins, there is a mixture of trepidation and expectation. This will also be an uncertainty faced by many industries.

No one is spared

Samsung's earnings report released on January 31 surprised the market. Of the three major divisions of Semiconductors (DS Group), Equipment (DX Group), and Displays (SDC Group), only the Display Division increased profits.

Samsung has arguably made life difficult for its rivals in the past few years. Its flagship Galaxy S22 was reduced in price by $200 in the European and American markets, and an employee of an Android manufacturer joked to 36Kr, "As soon as the big guy is discounted, everyone will buy the big guy's goods." ”

But even so, Samsung's earnings report can still be described as bad. Although sales increased, operating profit declined. In the end, the strategy of reducing prices and moving volume cannot turn the situation around. In the fourth quarter of festival and promotion-intensive, Samsung shipments fell 15.6% year-over-year.

Samsung's explanation for this is that "the global economy is down, demand is weak, and the sales environment has deteriorated significantly." ”（The business environment deteriorated significantly in the fourth quarter due to weak demand amid a global economic slowdown.）

Unlike Apple, which only does high-end, Samsung sweeps the market with low-end machines in India, Southeast Asia, and Latin America. The shortage of food and energy caused by the Russian-Ukrainian war and the rise in interest rates of the dollar have caused these regions to fall into inflation. Inflation in Mexico, Peru and other places has broken more than 20 years of records, and retail prices in India have also hit an eight-year high. Users of low-end models in such regions are sensitive to price quarters, and bulk consumer goods such as mobile phones are naturally left behind by users.

Also stagnant was Apple, which also fell by double digits in the fourth quarter because of supply problems at Foxconn in Zhengzhou. But more importantly, the demand side is shrinking, and this malaise not only affects the low-end market, but also affects Apple's high-end users. In the Chinese market, Apple's Double 11 sales fell year-on-year, and at the end of 2022, it cut orders for MacBooks in Southeast Asia.

This is also the most unsettling moment for the giants. Since the global smartphone market first declined to the stock market in 2017, there are still some market gaps for individual manufacturers. High-end machine market, Apple and Samsung, including Huawei before 2020 to eat each other, the low-end market has Samsung, Xiaomi, realme's sea of machines. No matter how the big market fluctuates, there is always a brand that can stand out, Huawei before 2020, Apple, Samsung and Xiaomi after 2020.

It can be said that the market still has some hope of returning to the light in the past two years. The wreckage of Huawei's overseas markets has not yet been eaten, which is a valuable increment for other rivals. But in 2022, the battlefield has been cleaned up, the loot has been divided, and there will be no new possibilities.

This also means another harsh truth: when Apple's sales are declining, the possibility of Android manufacturers breaking through the high-end market will only be slimmer.

Winter spreads

The cold wave quickly spread from the consumer electronics industry downstream.

According to Guo Mingxi, 170 million units were cut in the first quarter of 2022 in just Chinese mainland. MediaTek and Qualcomm have lowered their expectations, and MediaTek has cut orders by 35%.

This situation has continued throughout 2022. The slash in SoC means less demand for memory chips, which account for nearly one-third of the market in the entire semiconductor industry.

Since the end of 2022, layoffs have been a topic that the semiconductor industry cannot avoid. There are geopolitical tensions between China and the United States, as well as a bust in the consumer electronics market.

The two largest categories of memory chip customers are PC and mobile phone manufacturers. A company like Samsung that makes mobile phones and memory chips has double the blow and dividend. In December 2022, Taiwan's Economic Daily reported that Samsung's expected shipments in 2023 were cut from 300 million to 260 million. Coupled with other mobile phone manufacturers also reduced the purchase of memory chips, which led to Samsung's plummeting.

The entire semiconductor industry chain suddenly fell into the ice cave from the radicalization in the early days of the epidemic. U.S. semiconductor equipment giant Lam laid off 1,300 people, and CEO Tim Archer also said on the earnings conference that he has not experienced such a sluggish demand for memory chips in the past 25 years. According to Lam, the semiconductor equipment market will shrink by 20% in 2023. ETnews' report is even more exaggerated: many customers will halve their capital investment in 2023.

It is not only the industry that is affected, but even some important countries. According to the Korea Development Bank, South Korea's chip exports will decline by 9.8% in 2023, while according to South Korea's ETnews, South Korea's semiconductor inventory has reached 20 weeks, compared with 5-6 weeks in the past. SK Hynix directly canceled orders from equipment manufacturers in the fourth quarter.

In addition to South Korea, there is also Vietnam, a major mobile phone manufacturer. According to the National Bureau of Integrated Statistics of Vietnam, smartphone production in Vietnam decreased by 9.3% as of November 2022. Samsung is the largest mobile phone manufacturer in Vietnam, and the production contraction directly affects Vietnam's mobile phone production.

2022 is a year of war, interest rate hikes, and inflation. The consumer market seems to have shifted from boom to downturn in a matter of months, unexpectedly surprising the consumer electronics industry. Samsung Electronics also acknowledged in its own statement: "Demand fell more than expected in the fourth quarter, and the price of memory chips also fell more than expected." ”

Of course, Samsung and Apple have rich businesses and enough global user accumulation. After a painful adjustment, it will recover from the macroeconomic upturn in late 2023 to 2024. China's Android manufacturers, which have been frustrated overseas, may usher in a more difficult future.