According to data from consulting agencies, the global smartphone market has declined for five consecutive quarters, while the Chinese market is even worse, with the lowest prosperity in a decade. At present, smartphone manufacturers are caught in a global involvement, constantly improving the configuration of mobile phones. OPPO's self-developed chip was eventually overwhelmed and disbanded. Under the market depression, suppliers also have to find another way out, layout AR, VR, automotive and other fields. Mobile phone manufacturers have always lacked disruptive innovation and still need to find the next spring.
The smartphone market contracted and the recovery was lower than expected
Halfway through 2023, the domestic economic recovery has been fermenting for months, and the hot scene of the "May Day" holiday allows everyone to immerse themselves in the prosperity of economic activities.
However, the scene of "retaliatory consumption" has not been staged in the field of consumer electronics, and smartphone shipments have experienced a long period of decline, and the head mobile phone brand has fallen into crazy involvement.
Judging from the first quarter of 2023, the mobile phone market is miserable. Canalys recently released a survey report that the global smartphone market has experienced five consecutive quarters of decline, falling 13% year-on-year in the first quarter of this year to 270 million.
China, the world's largest smartphone market, is at its lowest level in a decade. In the first quarter of 2023 Chinese mainland smartphone market shipments fell 11% year-on-year to 67.6 million units, the lowest first quarter since 2013.
From the perspective of mobile phone brand manufacturers, the industry concentration is obvious. According to Canalys data, in Q1 2023, the top five manufacturers in global smartphone shipments are Samsung, Apple, Xiaomi, OPPO, and vivo, with market shares of 22%, 21%, 11%, 10%, and 8%, respectively, and CR5 reaching 72%.
In fact, the competitive landscape of smartphones has long stabilized, but the overall market is not as good as before.
Only Apple's shipments of the head manufacturers achieved positive growth, but only 3%, while Samsung, Xiaomi, OPPO, and vivo fell by 18%, 22%, 8%, and 17% year-on-year.
Samsung and Apple have secured the top 2 in the industry with their perfect global market layout and product influence in the high-end market.
Xiaomi, OPPO, and vivo are affected by the decline of the domestic market and insufficient willingness to consume, and have fallen into involution in the high-end market and mobile phone configuration.
On the one hand, the saturation of the smartphone market and the well-developed and perfect market have prompted the three giants of Xiaomi, OPPO and vivo to begin to impact the high-end market.
In 2022, Xiaomi, OPPO, and vivo respectively launched the Xiaomi 13 series, OPPO Find N, and vivo X90 series, all of which have achieved good results and further strengthened the high-end of domestic mobile phones.
After the launch of the Xiaomi 13 series, Xiaomi was in the first position of domestic high-end smartphones for three consecutive weeks.
OPPO's foldable product, OPPO Find N, won the second place in folding large-screen sales in 2022.
The vivo X90 series set a record high in sales of the vivo X series, with sales increasing by 2 times compared with the X80.
On the other hand, the three domestic giants face the same price competition from similar consumer groups, so they are also catching up in mobile phone configuration, including special chips, image configuration, fast charging and heat dissipation, system optimization, etc.
In the field of special chips, the three giants have launched Xiaomi surging series chips, ViVO V series image chips, and OPPO Mariana series chips; At the same time, it also began to do the dimensionality reduction competition of the sinking of flagship chips, and launched Redmi K60, OnePlus Ace 2V and other products.
In addition to mobile phone brand manufacturers, the data of mobile phone supply chain manufacturers also shows that smartphone consumption has been significantly weak.
Sunny Optics specializes in providing lenses for smartphones, according to its business data in March this year, mobile phone lens shipments were 84.334 million pieces, a year-on-year decrease of 29.8% and a month-on-month increase of 4.5%; Mobile phone camera module shipments were 36.389 million units, down 24.1% year-on-year and up 20.3% month-on-month.
The year-on-year decrease and month-on-month increase in mobile phone accessories shipments indicate that the current decline in smartphone demand has slowed down, but it has not yet bottomed out, and smartphone sales are not optimistic.
At present, the downstream channel inventory is maintained at about 2-3 months, and the performance of smart phones may rebound in the third quarter of this year.
But even Apple's mid-to-high-end categories need to cut prices to inventory, and the weak recovery of consumer electronics is significantly lower than market expectations.
The OPPO chip team disbanded in place, and the inner roll was incomplete
As mentioned earlier, domestic manufacturers continue to roll up in order to improve competitiveness, including independent research chips, but the OPPO chip team suddenly announced its disbandment recently.
On May 12, 2023, OPPO closed its chip business company ZEKU, mainly due to "uncertainty in the global economy and mobile phone market".
In 2019, OPPO founder and CEO Chen Mingyong announced with a high profile that he would invest 50 billion yuan in the next three years for self-research of the underlying technology. In December 2021, OPPO's first self-developed chip, MariSilicon X, was officially released, and the OPPO Find X6, which was released just two months ago, was officially released.
OPPO's chip project seems to be proceeding step by step, why suddenly say stop?
On the one hand, the mobile phone industry is languishing, and OPPO's ability to make money has weakened. According to Wind data, the performance of the electronics industry in the first quarter of 2023 is under pressure, with revenue and net profit attributable to the parent falling year-on-year, and gross margin and net profit margin declining.
The macroeconomic downturn and the slowdown in terminal innovation capabilities have led to weak downstream demand, fewer and fewer users of new mobile phones, and some brands have also reduced prices to inventory.
On the other hand, developing chips is too expensive. When OPPO self-developed 6nm Mariana X chip, the cost of one tape-out is as high as tens of millions of dollars, and the tape-out cost of the second self-developed Mariana Y chip is higher.
OPPO also poached R&D talents from the industry, paying high costs. 80% of the team of 3,000 people are R & D personnel, according to the average annual salary of 500,000-600,000 chip design positions, the annual salary cost is 1.5-1.8 billion yuan.
In addition, it is difficult to develop chips to bypass the US grip on China. At present, OPPO's self-developed Mariana X and Mariana Y are both 6nm processes, and the AP under development may be the most advanced 4nm process, which is very vulnerable to the obstruction of the United States.
Industry depression + chip burning + clamping risk, in fact, the most important thing is that its own hematopoietic ability has deteriorated, and it cannot afford heavy research and development costs.
The market of the whole machine deteriorated, and upstream suppliers were also implicated. At present, from high-end to low-end brands are cutting orders, and the mobile phone industry is undergoing structural adjustment. China's major Android mobile phone brands plan to reduce orders by about 170 million units in 2022 (accounting for 20% of the original shipment plan in 2022).
Brand owners roll inward to the skin decently, accessories manufacturers also have to look for a new way out.
Goertek began to shift from mobile phones to smart hardware. According to its 2022 annual report, Goertek's smart hardware business revenue increased by 92.27% year-on-year, accounting for 60.14% in 2022 from 41.94% in 2021, including smart home electronic game consoles and accessories, smart wearable products, smart home products, etc.
In addition, Goertek has also established an automobile manufacturing company, which seems to be interested in joining the wave of smart cars.
Luxshare Precision has already laid out the automotive industry, and has formed a rich product line in the automotive field, including automotive wiring harnesses, connectors, intelligent new energy, intelligent networking, intelligent cockpit control, etc., and Luxshare Precision achieved 48.44% growth in automotive interconnection business in 2022.
As a fruit chain foundry leader, Luxshare Precision also made a judgment on the consumer electronics industry, pointing out that in addition to high-end products, the demand for smart phone markets will continue to shrink in the future.
The reasons for market contraction are complex and diverse, and the key is the lack of disruptive innovation
The decline of the smartphone market is caused by multiple factors, but it has been traced in the development process of more than a decade.
From the perspective of the macro environment, the strong impact of the three-year epidemic has dealt a heavy blow to consumers' income level and willingness to consume at the demand side, and blocked the offline sales channels of smart phones, which is very unfavorable to mobile phone manufacturers that rely on offline stores.
On the other hand, complex international situations such as geopolitical conflicts and Sino-US trade have affected the research and development, production, transportation and other links of the manufacturing industry at the supply side level.
However, the key point is that smartphones, once the terminal performance of technological innovation, are now in the exhaustion of innovation, and there is an increasing lack of disruptive innovation.
In 2007, the first generation of iPhone was released, it has a 3.5-inch LCD screen, Samsung S5L8900 chip, 2 million pixel camera, and most importantly, it uses a touch screen interface that subverts the traditional buttons, which has since unveiled the era of smartphones.
With the popularization of 3G and 4G in China, smart phones have entered the lives of the general public with the spring breeze of fast Internet access, ushering in vigorous development. In 2012, global smartphone shipments increased by 45% year-on-year, and the Chinese market increased by 135% year-on-year.
However, the increase in smartphone penetration also shows that the demographic dividend of the industry has gradually decreased, and the entire industry has begun to enter the existing market competition from incremental market competition.
What is even more embarrassing is that with the continuous improvement of the configuration of smartphones, the user's replacement cycle continues to lengthen, from 31 months in 2021 to 42 months in 2022. Market saturation + low repurchase rate, negative population growth has made this situation worse.
Whether it is Apple or Android, each new generation of new products is not much different from the previous generation of products, mainly some regular upgrades. The product is not innovative enough to raise consumers' desire to buy.
The most intuitive is the innovation of the mobile phone screen. In terms of mobile phone screen size, major manufacturers have reached the end. In the case of the same size of the phone, there is also the extension of the screen to the edge of the phone to become a full screen, but it is difficult to break through after that.
Another form of screen is a folding screen mobile phone, which has been four years since Samsung launched its first folding screen mobile phone in 2019.
Folding screen mobile phones are usually divided into inner folding, outer folding and vertical folding, and the representatives of these three aspects of domestic mobile phones are Huawei Mate X3, Huawei Mate Xs 2, OPPO Find N2 Flip.
Folding screen mobile phones have brought people novel screen vision and alternative ways of carrying, but the market imagination space is small.
According to CINNO Research, sales of folding screen mobile phones in the Chinese market reached 2.83 million units in 2022, a year-on-year increase of 144.4%. Although it seems that the growth rate is very good, the market space is actually very small, and the penetration rate of folding screen mobile phones in 2022 is only 1.2%.
The obvious screen crease and heavy weight make the folding screen mobile phone more niche and curious, and do not bring more practical innovation. Frequent opening and closing of the lost mobile phone, the thickness is too large and the user lacks the motivation to carry it around.
In addition, the camera configuration has also been able to meet the needs of users in an all-round way. The number of cameras on the phone ranges from one to five, the pixels range from 1 million to 100 million, and there are super sensitive lenses, telephoto lenses, ultra-wide-angle lenses, portrait mode, night mode, professional mode, etc., buying a mobile phone makes you feel like you have bought a low-priced camera.
No matter how mobile phone manufacturers play new tricks, the exhaustion of product innovation is obvious.
After more than a decade of development, the functions of smart phones have fully met the needs of users, that is, "excess". In an economic downturn, it's hard for consumers to pay for micro-innovations like toothpaste.
Look for the next spring and wait for the market to recover
Since 2010, when smartphones slowly replaced traditional mobile phones, mobile phone innovation reached its peak in 2015, and then mobile phone innovation is more a marginal improvement in performance, and has entered the global involution.
For more than ten years, the rapid iteration of smart phones has not only nurtured a huge industry, but also driven the vigorous development of the Internet. But it's unrealistic to expect a consumer product to endure, and there are countless examples of this.
For smartphones to remain alive, they need to look for the next spring.
In the era of the Internet of Everything, mobile phone manufacturers need to grasp the changing trend of intelligent interaction. In the future, mobile phones can be used as ports for the Internet of Everything and the intelligent connection of all things, and more ubiquitous connections can be completed, such as mobile phones connecting homes, cars, etc., and consumer electronics still have room for imagination.
The emerging smart wearable market may hint at a new form of the next generation of mobile phones, whether it is a watch type or a glasses type, which is likely to be a product breakthrough.
Apple, the pioneer of smartphones, has been studying this for many years, and Apple's MR headset may debut at this year's WWAC, which is expected to catalyze the XR interactive revolution.
Insiders revealed that Apple's MR headset will use both eye tracking and hand tracking technology, and establish an interaction mechanism between the two, that is, after aiming at the project, users can use the "thumb and forefinger pinch" gesture to activate the task without a handle.
At present, the VR product ecology on the market is too closed, VR manufacturers do their own thing, not connected to each other, weakening the content development power of Internet manufacturers, MR products may break the ecological deadlock again.
VR products are also ushering in policy benefits. In November 2022, the Ministry of Industry and Information Technology and other five departments jointly issued the Action Plan for the Integrated Development of Virtual Reality and Industry Applications (2022-2026), pointing out that by 2026, virtual reality will achieve large-scale application in important economic and social industries.
Product innovation still has a long way to go, and in the short term, we can also focus on structural opportunities in the industry.
At present, high-end mobile phones are becoming a new growth engine for the industry. As pointed out earlier, the domestic three giants have sold well in high-end models, and the overall situation is also very good.
According to Counterpoint Research data, the proportion of sales of high-end smartphones (wholesale prices above 3,500 yuan) in China will increase to more than 26% in 2022, and Chinese consumers' demand for high-end smartphones will continue to grow under the general trend of consumption upgrading.
The market generally expects smartphones to improve in the third quarter of this year, compared to the PC market, and the recovery is expected to continue into next year.
According to IDC, global PC shipments in the first quarter of 2023 were 56.9 million units, down 29% compared to the same period last year. Among them, the top five brands all saw their shipments decline by more than 24%.
Compared to smartphones, PC users have longer replacement cycles and excess performance. PC manufacturers can only maintain market share by launching more competitive products.
This year, Lenovo, HP, Asus and other manufacturers have launched new products in a targeted manner, all adopting the strategy of "high allocation and low price", but the past three years of home office and online teaching have consumed personal PC demand in advance.
Canalys noted that the PC market recovery is expected to begin in the fourth quarter of 2023 and gain momentum in 2024.
Everyone is waiting for the market to pick up in the second half of the year, but what if?
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Article picture: Tuworm Creative
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