TrendForce: Off-season is not slow, total smartphone production in Q1 2021 may reach 342 million

Jiwei.com reported on March 9 that according to research by TrendForce, due to other smartphone brands seizing the market share released by Huawei and the hot sales of Apple's new phones, the first quarter of 2021 continued to grow, and the total production of smartphones is expected to reach 342 million units, a year-on-year increase of 25% and only a 6% decrease compared to the fourth quarter of 2020.

Image source: TrendForce

In 2020, the global sales of high-end mobile phones declined due to the epidemic, but Apple maintained its high-end market share with its new 5G phones and adopted an active pricing strategy. In the fourth quarter of 2020, its production volume reached 77.6 million units, an increase of 85% quarter-on-quarter, surpassing Samsung to win the global championship. Among them, the new iPhone 12 series accounted for as much as 90%. In the first quarter of 2021, Apple is expected to drive the total production to 54 million units due to the continued hot sales of the iPhone 12 series, with new phones accounting for about 80%.

TrendForce predicts that Apple will launch four new flagship models in the second half of the year, and is expected to maintain an aggressive pricing strategy. In addition to the A15 Bionic chip, the rest of the hardware will focus on optimizing existing functions and can be seen as an extension of the iPhone 12 series.

Samsung ranked second in the fourth quarter of 2020 with a production volume of 67 million units, a 14% decrease from the previous quarter. In the first quarter of 2021, in order to maintain its high-end market share, Samsung released its new flagship Galaxy S21 series in advance and simultaneously launched preferential prices to stimulate sales. It is estimated that the total production volume in that quarter will reach 62 million units.

TrendForce predicts that Samsung will still be the world's number one in 2021, but with the rise of Chinese brands, its market share will continue to decline, and its leading position in the market will be put to the test. It is expected that the large-screen Galaxy Note series and the folding screen Fold series will be combined into one, and the Galaxy A series will still be the main sales force.

OPPO (including OPPO, OnePlus, and realme), Xiaomi, and vivo produced 50 million, 47 million, and 31.5 million units in the fourth quarter of 2020, respectively, ranking third, fourth, and sixth. In the first quarter of 2021, the three brands maintained optimistic production targets and actively deployed domestic and overseas markets. However, the current shortage of wafer foundry capacity has limited the growth performance of the three brands in terms of total production.

TrendForce predicts that OPPO (including OPPO, OnePlus, and realme), Xiaomi, and vivo are all actively engaged in the innovative research and development of high-end products, striving to replace Huawei in the high-end mobile phone market. Xiaomi and OPPO are also competing for market share through the cost-effective Redmi and realme series. Among them, Xiaomi is expected to have a better market share performance throughout the year due to its early entry into overseas markets.

Huawei's high inventory strategy after the tension between China and the United States helped mitigate the impact of US commercial sanctions, and its production targets in each quarter were mainly to maintain stability. Therefore, it still produced 34.5 million units in the fourth quarter of 2020, a quarterly decrease of 21%, ranking fifth. If the relevant components fail to obtain shipping licenses before the end of the first quarter, it is estimated that the brand will face a significant material supply gap at the end of the second quarter of 2021.

In addition, since the beginning of 2021, Huawei's sub-brand Honor has been officially spun off. It is also limited by the tight wafer foundry capacity. It is estimated that the production performance of the new Honor this year will be limited. In
early 2021, LG was reported to close or sell its mobile phone department, and also suspended the development of new projects. LG's sales market is concentrated in the Americas, and it is estimated that the market share will be taken over by the telecommunications industry's own brands, Samsung, Xiaomi and other brands.

TrendForce predicts that the total number of smartphone production in 2021 is expected to rebound by 9% to 1.36 billion units. However, due to the recent tight wafer foundry capacity, the supply of APs and TDDI for smartphones is limited. Most brand manufacturers can only schedule production with the maximum amount of raw materials available, which will blur the boundaries between the peak and off-season this year and reduce the quarterly growth rate.