China’s smartphone sales decline 22% in first quarter, only Huawei bucks the trend

Tan KW

Publish date: Fri, 01 May 2020, 11:40 AM

China’s smartphone sales plummeted 22% in the first quarter of 2020 - the largest year-on-year decline tracked - compared to the same period last year, and Huawei Technologies was the only major player to come off better despite the coronavirus pandemic, according to a report by Hong Kong-based research firm Counterpoint.

Shenzhen-based Huawei saw smartphone sales grow 6% year-on-year in the quarter ended March 31, making it the only major smartphone maker in the market to achieve positive growth during the first quarter when compared to the same period last year, said Counterpoint in the report on Wednesday.

The China market was “primarily dragged down by the dismal sales of smartphones in February with a decline of 35% when the country was severely impacted by the Covid-19 pandemic and commerce activities were minimal”, said Counterpoint research analyst Flora Tang in the report.

“However, the decline was smaller than original expectations thanks to the strong support from China’s e-commerce players including Alibaba [and] JD.com,” Tang said, adding that online sales of smartphones in China accounted for more than 50% of sales during the first quarter compared to 30% in 2019.

Alibaba is the parent company of the South China Morning Post.

Huawei’s strong performance comes amid not only tough market conditions due to the pandemic, but restrictions on its access to US components after the Trump administration put it on a trade blacklist in May last year.

In the first quarter of the year, Huawei’s chip unit HiSilicon also surpassed US chip giant Qualcomm as the top smartphone processor supplier in China, according to a separate report by Chinese research firm CINNO, as the Shenzhen-based company ramped up production of its own American component-free parts.

Counterpoint’s report on Wednesday showed that Huawei, along with fellow Chinese smartphone vendors Oppo, Vivo and Xiaomi and consumer tech behemoth Apple, accounted for a record 93% of the Chinese smartphone market, up by six percentage points compared to last year.

Huawei’s gain in market share was the most drastic, rising from 29% in the first quarter of last year to 39% in the latest quarter.

This can be attributed to its “complete product portfolio” ranging from entry-level to premium segments, according to Counterpoint senior analyst Ethan Qi. Huawei’s Mate 30 5G, Mate 30 Pro 5G, Huawei Nova 6 5G, and HONOR 9X were all among the top-selling models in the country in the most recent quarter, Qi added.

At the other end of the spectrum, Xiaomi’s smartphone shipments declined the most among the major players, with a 35% drop that resulted in its market share edging down from 11% in the first quarter of last year to 9% in the same period this year.

“We believe the halt in production has affected results in the first quarter, as smartphones are essential devices,” Xiaomi said in a response to Counterpoint’s report.

However, the Beijing-based company pointed to the “unstoppable” trend of consumers switching to 5G-enabled smartphones as a beacon of opportunity. “We have not changed our 5G product launch strategy, and we expect at least 10 new 5G smartphone models to hit the market this year,” Xiaomi said.

Counterpoint, whose forecasts are widely used in Asia’s booming chip and mobile phone industry, reported that sales of 5G smartphones grew 120% quarter-on-quarter in the first three months of the year, with Huawei contributing to over half of the total 5G phone sales followed by Vivo, Oppo, and Xiaomi.

“We expect 5G smartphones to rise to account for over 40% of total smartphone sales in China by the end of 2020,” Counterpoint analyst Mengmeng Zheng said in the report.

- SCMP

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