Smartphone shipments rise after five-quarter losing streak

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Worldwide smartphone shipments trends shows Samsung retains top spot, while Huawei, despite the US sanctions posts highest y-o-y growth

Smartphone market breaks five-quarter losing streak in Q3 with 1.2 percent growth

After suffering five consecutive quarters of declines, the global smartphone business managed to attain marginal growth in the third quarter as Huawei’s shipments reached a record high during the period.

Highlights:

  • Worldwide smartphone shipments hits 360.1 million units in Q3 2019
  • Samsung retains top rank in the smartphone market with 78 million shipment
  • No.-2 Huawei posts strongest year-on-year growth (28%) shipping 66.8 million
  • Apple, Xiaomi and OPPO shipped 45.9, 31.4 and 28.6 million respectively

Worldwide smartphone shipments totaled 360.1 million units in the third quarter of 2019, up 1.2 percent from 355.8 million during the same time period in 2018, according to the Smartphone Intelligence Service – Premium from IHS Markit. This marks the first year-over-year increase since the first quarter of 2018.

Huawei defies sanctions to achieve record shipments

While Samsung retained the top rank in the smartphone market, No.-2 Huawei was the standout performer during the third quarter, with shipments surging by 14.8 million units to reach 66.8 million. Shipments rose by 28 percent compared to one year earlier. This represented the most smartphones the company has shipped during a single quarter.

“Huawei’s volume increase was driven by strong demand from the domestic Chinese market,” said Jusy Hong, research and analysis director for IHS Markit | Technology. “Company smartphone shipments in China increased by 65 percent in the third quarter on a year-over-year basis. Huawei’s strong home-field performance more than compensated for its overseas sales, which fell due to U.S. sanctions.”

Huawei’s overseas shipments fell on a year-over-year basis in the third quarter. However, these shipments expanded compared to the second quarter. The company is engaging in promotional activities designed to mitigate shipment declines in regions like Western Europe.

Huawei is on a growth streak in 2019, with the company’s smartphone shipments for the first three quarters of the year totaling 184.6 million units. This is the company’s biggest shipment volume for the first nine months of any year.

Huawei’s third quarter shipments now exceed the combined annual total volume of smartphone brands ranked seventh or lower. Its shipments are also equivalent to the half-year shipment volume of second-tier brands such as Xiaomi, OPPO and Vivo.

However, the sanctions could begin to take a toll in the future.

“As U.S. sanctions continue, Huawei is prohibited from including Google Mobile Services on new smartphones going forward,” Hong said. “The launch of the Mate 30 series was the first sign of Huawei devices without Google services. Huawei will face increasing difficulties in some markets if its new smartphone models cannot include Google services.”

Hong noted that Huawei’s existing devices can still launch with Google services. As a result, Huawei is expected to focus on these models to defend the overseas market.

Samsung refreshes smartphone line

Samsung Electronics retained the No. 1 spot globally by shipping 78.0 million units in the third quarter. This is a 10 percent increase over the same period last year. The company’s market share also increased by 2 percentage points to 22 percent.

Samsung’s market share dropped to 19 percent in the fourth quarter of 2018 due to intensifying competition with Chinese companies. However, this year, the company’s market share has remained around 22 percent.

Samsung has been strengthening its mid-range and low-end smartphone lineup to compete with the budget phones from Chinese brands. Samsung Electronics discontinued its existing low-end series, the Galaxy J-series, and integrated it into the Galaxy A-series.

This year’s Galaxy A-series has been contributing to Samsung’s increased volume, with the product line focusing on improved capabilities and offering mid-level and low-priced products at various price points. Furthermore, Samsung has increased shipments of models produced by outsourced manufacturers. This is allowing the company to offer cheaper smartphones that can compete with Chinese competitors’ low-priced products.

iPhone shipments decline for fourth consecutive quarter

Apple shipped a total of 45.9 million iPhones during the third quarter. This was a 2.1 percent decrease from the same period in 2018 and continued Apple’s unit decline for a fourth consecutive quarter. However, Apple was able to limit the rate of unit volume decline to single digits. Apple’s market share in the third quarter totaled 13 percent, up from 11 percent in the previous quarter.

Sales of new iPhones in the fourth quarter are expected to increase year-on-year, thanks to the reduced entry-level price of iPhone 11 to less than $700. Apple also improved the camera functions on its new models, addressing key user demands. In addition, a $150 price reduction of existing models is expected to contribute overall shipment volume growth in the fourth quarter. Apple’s new pricing policy is intended to expand the addressable market for Apple’s content services now rolling out to consumers.

Second-tier brands target India

Second-tier brands Xiaomi, OPPO and vivo have seen their growth stunted due to Huawei’s market share expansion in China, combined with difficulties in developing sales in overseas markets. Xiaomi’s shipments declined by 6 percent and Vivo declined 3 percent. OPPO, on the other hand, grew by 2 percent. In terms of cumulative shipments this year, Xiaomi and OPPO were down year-on-year, and only Vivo showed a slight increase.

These companies are trying to break out of China’s domestic market—where smartphone demand has been declining for three years—and trying to break into overseas markets. For steady quantitative growth, market development is essential in outside of Asia-Pacific.

Meanwhile, smartphone demand growth in India, the world’s third largest market, has led to a steady increase in shipments of brands that offer low-end products. Among them, Realme’s growth is notable.

Realme is a distinct brand from OPPO that targets Xiaomi’s Redmi and builds its lineup around low-cost products. Realme surpassed 10 million units for the first time in the third quarter. Since the brand first arrived in the market in the second quarter of last year, it has experienced a sharp increase in volume every quarter, and its market share, at 3 percent, surpassed LG Electronics and Motorola.

Moreover, shipments from another low-end brand, Tecno, increased steadily, recording its highest-ever quarterly shipments in the third quarter.

Top-10 smartphone brands in Q3 2019 (Ranking based on unit shipments in millions)

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