2020 Smart Hardware Industry ODM Report: Huaqin Smartphone Shipments Reach 162 Million Units

According to Jiwei.com, as the shipment volume of the smartphone market continues to concentrate, the concentration level of upstream suppliers is also increasing. Taking the ODM manufacturers in the mobile phone industry as an example, the current ODM industry shipment volume is mainly concentrated in a few leading companies such as Huaqin, Wingtech, and Longcheer.

Overall, smartphone terminal brand manufacturers are gradually focusing on cutting-edge exploratory technology research and development, product marketing, brand upgrading and after-sales service, and outsourcing the research and development, design or manufacturing of mainstream products to professional ODM manufacturers. This shows that ODM manufacturers are becoming increasingly important to mobile phone brand manufacturers.

At the same time, with the overall growth rate of smartphone shipments slowing down, leading ODM industry manufacturers have long begun to layout non-mobile phone markets, and have continuously replicated their successful experience in the mobile phone market to new markets such as tablets, laptops, smart watches, TWS headphones, etc., and have achieved significant results. In the process, it has also driven the development of domestic supply chains, and with the rapid rise of new markets, it will further help the localization of the supply chain.

Huaqin's smartphone shipments reached 162 million units in 2020: the company has completed the guidance for listing on the Science and Technology Innovation Board

Recently, data research organization Counterpoint released a report on global smartphone ODM/IDH shipments in 2020. According to the data, the total shipments of global smartphone ODM/IDH in 2020 reached 480 million units, a year-on-year increase of 22% compared with 395 million units in the same period last year, accounting for 36% of the entire smartphone market shipments in 2020, and it is expected that shipments will further increase to 560 million units in 2021.

Among them, Huaqin ranked first in the industry with a shipment volume of 162 million units. Its shipment volume increased by 101% year-on-year. It was followed by Wingtech with shipments of 110 million units, a year-on-year increase of 2%. The third was Longcheer with shipments of 98 million units, a year-on-year increase of 32%. The three companies together accounted for 77% of the market share.

Image source: Counterpoint

From the shipment data of the above ODM manufacturers from 2016 to 2020, it can be clearly seen that Huaqin's shipments in the market have increased rapidly. Its market share was 16% in 2016 and has risen to 34% in 2020. It is obvious that Huaqin's growth is very fast and steady. In addition, Longcheer's market share has also increased from 6% to 20%.

从华勤来看，其显著增长主要由大客户三星、OPPO/realme/Oneplus及小米的增量订单拉动。华勤2019下半年进入三星供应商体系，并于2020年初开始为三星规模供货。凭借在研发、产能、出货效率及整体服务质量方面的领先优势，华勤成为2020年三星的Top 1 供应商，赢得三星智能手机委外订单超过50%。

At the same time, Huaqin has a diversified customer portfolio, and its customer products cover multiple markets including China, India, Southeast Asia, Latin America, North America, and Europe. Therefore, Huaqin has a strong ability to resist risks, and the impact of the new crown epidemic on Huaqin's sales in 2020 is limited. 

Image source: Counterpoint

Judging from the contribution of ODM/IDH shipments of smartphone terminal brands, the largest contributors in 2020 were Xiaomi, OPPO (including realme and Oneplus) and Samsung. The outsourced ODM/IDH shipments of the three were 115 million units, 105 million units and 81 million units respectively, totaling 301 million units, accounting for nearly 63% of the entire market share.

In addition, according to the author's inquiry, on June 10, according to the Shanghai Regulatory Bureau, CICC issued a public announcement on the summary report of the coaching work of Huaqin Technology Co., Ltd. (hereinafter referred to as "Huaqin Technology").

CICC said that through the guidance, Huaqin Technology has improved and standardized all aspects of the company's operations. The company believes that through the previous guidance work, Huaqin Technology has met the requirements of guidance acceptance and the application conditions for the initial public offering of stocks and listing on the Science and Technology Innovation Board in accordance with the requirements of the Company Law, the Securities Law, the Science and Technology Innovation Board Initial Public Offering Registration Management Measures (Trial) and other relevant laws and regulations, and there are no substantive issues that affect the issuance and listing.

Qualitative changes in domestic ODM manufacturers: helping the rise of domestic supply chains

There is no doubt that for the current ODM manufacturers, we can actually find that the top three ODM giants Huaqin, Wingtech, and Longcheer have already started to deploy in the non-smartphone market and have achieved obvious results.

Looking forward to the development of domestic ODM, it can be summarized into three points: First, as a technology-driven enterprise, its production capacity and output value continue to grow and has formed a platform; second, based on the accumulation of technology and production capacity, it expands new markets horizontally, starting from the high-end market; third, for consumer electronics industries such as smartphones, the value of ODM manufacturers to the supply chain is self-evident. In the past few years, ODM manufacturers have helped a large number of domestic supply chains rise, and this trend will be more obvious in the future.

1. Technology drives the expansion of production capacity

First of all, in terms of technology and production capacity output value, the three current giants, Huaqin, Wingtech and Longcheer, are all technology-driven technologies. For example, in terms of hardware, Huaqin has set up laboratories and increased its efforts in research and development, and the same is true in terms of software. For the whole machine, the most important thing is systematic design and development. Huaqin provides terminal manufacturers with higher quality products through the combination of software and hardware.

As we all know, the research and development and production of smart hardware manufacturers cover many fields such as industry, chips, artificial intelligence, screen display, biometrics, software and hardware algorithms, hardware drivers, etc. Thousands of components are precisely designed, hardware and software are effectively matched, and finally optimized and debugged into terminal hardware such as smartphones, laptops, and tablets.

Terminal brands outsource some of their products to ODM manufacturers for research and development and production. ODM manufacturers use their strong hardware research and development capabilities to provide terminal brand manufacturers with complete machine design plans. Once the plans are approved, they are handed over to ODM manufacturers for production. Terminal brand manufacturers conduct complete machine testing on the products produced by ODM companies.

In this process, a wide variety of supply chain components are involved, and the product iteration speed is very fast, which also puts higher demands on ODM manufacturers' accumulation of technical experience in software and hardware and structural design, as well as their independent product research and development capabilities.

In terms of production capacity, taking Huaqin as an example, its manufacturing centers include Nanchang Manufacturing Center, Dongguan First Manufacturing Center, India Manufacturing Center jointly owned by Guanghong and Indonesia Manufacturing Center jointly owned by PTSN. At the same time, Huaqin's Dongguan and Nanchang Second Manufacturing Centers are also under construction. It has a stronger control over product production and delivery, and is more flexible and effective in responding to temporary customer needs.

Up to now, the R&D strength and production capacity output value of Huaqin, Wingtech and Longcheer far exceed those of their peers. This advantage will become more obvious in the future, and the Matthew effect will be strengthened.

2. New market has achieved outstanding results in the high-end market

The second is to target new markets. As we all know, the current shipments of smartphones are close to saturation. Although the overall market is growing with the increase in 5G shipments, the growth rate is relatively slow. In this case, companies such as Huaqin, Wingtech, and Longcheer have all targeted new markets such as tablets, laptops, TWS headphones, and smart watches, and further replicated their successful experience in the smartphone field to new markets.

It is worth noting that, unlike mobile phone ODMs, in the mobile phone field, ODM manufacturers usually start from the low-end and move to the high-end market. After ten years of technological accumulation, first-tier ODM manufacturers have strong technical strength and production capacity. Therefore, when facing new markets, these manufacturers all start from the high-end market, forming a huge contrast in competitive advantages with their traditional Taiwanese ODM counterparts, and have achieved obvious results.

For example, in the notebook computer market, Huaqin and Wingtech have already laid out their presence in this market and started from the high-end market. In 2020, Huaqin's shipments reached 8 million units, a huge increase of 168% compared to 3 million units in 2019.

It is understood that in 2020, Huaqin has won a series of customer orders from Lenovo, Asus, Acer, Xiaomi, etc. Huaqin's advantage lies in creating new laptop products for customers, such as ultra-light and thin business notebooks, convertible notebooks, two-in-one win10 hybrid notebooks, etc.

It is reported that the global notebook computer ODM/EMS market shipments account for more than 80% of the overall notebook computer market. In 2020, about 88% of notebook computers were produced by ODM/EMS manufacturers, and about 74% of notebook computers were produced through ODM. With the rise of domestic ODM manufacturers in the notebook computer market, it can be foreseen that the shipments of ODM manufacturers such as Huaqin will inevitably increase rapidly.