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China’s Q221 Smartphone Shipment Forecast Lowered by Component Shortages
Q121 demand for smartphones in China experienced double digit Y/Y growth for the major Chinese brands at: 51m units for OPPO (including Realme), 49m for Xiaomi, 37m for vivo, 16m for Huawei and 5m for Honor. Sales volume Y/Y started to decline in April and earlier in May, we reported China’s smartphone shipments dropped 23.8% sequentially and 34.1% Y/Y after a strong 1Q, shining some light on the very aggressive shipment targets that Chinese smartphone brands had set for this year. While last year was an anomaly, this year seems to be toward a bit more consumer normality in some regions, and the unusual spate of pent-up demand last year might have given hope to Chinese smartphone brands for new growth, but component shortages and a currently severe outbreak of COVID-19 in India, the 2nd largest market for a number of Chinese smartphone brands. The cause of the shortfall was partly due to the semiconductor shortage for application processors (APs). Updated full-year targets for each brand are trending downward, and with the exception of Honor. OPPO, vivo, and Xiaomi have lowered their guidance to levels of ~90% in light of final demand and achievable AP procurement volumes. Huawei is impacted by US sanctions (only 4G excluding inventory), while Honor is unable to increase production due to AP and other component shortages, so they are in the process of adjusting their respective guidance numbers to more realistic levels.
India accounts for a high proportion of non-Chinese sales for OPPO, vivo and Xiaomi. India’s markets have been contracting recently due to a surge in COVID-19 cases.
Chinese brands will not adjust semiconductor-related procurement orders given the increasingly severe semiconductor shortage, partly due to supply-side incidents such as Samsung Electronics suspending operations at its Austin plant. Recent reports indicate a temporary correction in demand for components that have been over-supplied, such as LTPS-LCD panels and some passive components.
The table below shows the changes made to shipment targets from four Chinese brands based on current targets and those made in 4Q last year. Missing are Huawei burdened by trade issues with the US company’s reducing shipments both in China and globally, which would have been reduced regardless, given the sale of its Honor brand, along with OPPO and vivo who have yet to update targets. With component shortages and depleted inventory levels, Huawei’s shipment levels and share have become irrelevant, as other Chinese brands fill the gap. OPPO, vivo, Realme and OnePlus are privately owned by BBK Electronics based in Guangdong, China.
Table 1: Chinese’ Smartphone Production by Brand
Q121 demand for smartphones in China experienced double digit Y/Y growth for the major Chinese brands at: 51m units for OPPO (including Realme), 49m for Xiaomi, 37m for vivo, 16m for Huawei and 5m for Honor. Sales volume Y/Y started to decline in April and earlier in May, we reported China’s smartphone shipments dropped 23.8% sequentially and 34.1% Y/Y after a strong 1Q, shining some light on the very aggressive shipment targets that Chinese smartphone brands had set for this year. While last year was an anomaly, this year seems to be toward a bit more consumer normality in some regions, and the unusual spate of pent-up demand last year might have given hope to Chinese smartphone brands for new growth, but component shortages and a currently severe outbreak of COVID-19 in India, the 2nd largest market for a number of Chinese smartphone brands. The cause of the shortfall was partly due to the semiconductor shortage for application processors (APs). Updated full-year targets for each brand are trending downward, and with the exception of Honor. OPPO, vivo, and Xiaomi have lowered their guidance to levels of ~90% in light of final demand and achievable AP procurement volumes. Huawei is impacted by US sanctions (only 4G excluding inventory), while Honor is unable to increase production due to AP and other component shortages, so they are in the process of adjusting their respective guidance numbers to more realistic levels.
India accounts for a high proportion of non-Chinese sales for OPPO, vivo and Xiaomi. India’s markets have been contracting recently due to a surge in COVID-19 cases.
Chinese brands will not adjust semiconductor-related procurement orders given the increasingly severe semiconductor shortage, partly due to supply-side incidents such as Samsung Electronics suspending operations at its Austin plant. Recent reports indicate a temporary correction in demand for components that have been over-supplied, such as LTPS-LCD panels and some passive components.
The table below shows the changes made to shipment targets from four Chinese brands based on current targets and those made in 4Q last year. Missing are Huawei burdened by trade issues with the US company’s reducing shipments both in China and globally, which would have been reduced regardless, given the sale of its Honor brand, along with OPPO and vivo who have yet to update targets. With component shortages and depleted inventory levels, Huawei’s shipment levels and share have become irrelevant, as other Chinese brands fill the gap. OPPO, vivo, Realme and OnePlus are privately owned by BBK Electronics based in Guangdong, China.
Table 1: Chinese’ Smartphone Production by Brand
