On the afternoon of January 25, the latest mobile phone quarterly tracking report from International Data Corporation (IDC) showed that in the fourth quarter of 2023, China’s smartphone market shipped approximately 73.63 million units, a year-on-year increase of 1.2%. It rebounded for the first time after 10 consecutive quarters of year-on-year decline.
However, it should be noted that although the overall market has finally returned to a growth trend, market performance is still significantly lower than expected. The current market demand mainly comes from the high-end people in tier 1 to 3 cities. For example, the products with better sales are mostly concentrated in the flagship product series of various brands such as Apple iPhone 15, Huawei Mate 60, Xiaomi 14, vivo
China's smartphone market shipments in 2023 will be approximately 271 million units, a year-on-year decrease of 5.0%, the lowest shipment volume in the past 10 years. Throughout the whole year, in the first half of the year due to the continued impact of the economic environment and the epidemic, the overall mobile phone market was still in a sluggish stage; in the second half of the year, with the improvement of the economic environment and the increasing interest and attention from all walks of life in the mobile phone market, market demand gradually improved and improved, but it has not yet been fully released. However, manufacturers are still conservative and cautious about shipments, and the overall market performance is difficult to meet expectations.
Market performance of China's top five smartphone manufacturers in 2023
Apple
Shipments in the fourth quarter and 2023 ranked first in the domestic market. Although Apple has been significantly impacted by competing products in the domestic high-end market, and its own product upgrades have been limited, resulting in a loss of appeal, it has still attracted more consumer demand driven by substantial price reductions and promotions through third-party channels. Although it no longer has obvious advantages over Android flagship products, the overall comprehensive product strength of the iPhone is still one of the best. It's just that the prices of Apple products are not as good as before, and channel delivery price adjustments are getting earlier and earlier.
Honor
Shipments ranked first in the domestic Android market in the fourth quarter and 2023. Following the rapid recovery the year before last, Honor in 2023 will still maintain strong momentum in the face of fierce competition in the market. In the market above US$800, relying on the outstanding performance of folding screen products, the share has increased significantly; in the mid-to-low-end market, we have closely grasped the demand characteristics of offline consumers and created a variety of popular products. The success of its product strategy and improved cooperation with channels helped Honor secure the second position in total domestic shipments for the year.
OPPO
Although the overall market size will decline in 2023, it will still rank third in the market. Among them, it continues to make efforts in the folding screen mobile phone market. With the hot sales of Find N3 Flip, OPPO won the first place in the vertical folding product market in 2023; the horizontal folding product Find N3 performed well, helping OPPO reach a new high in the market share of more than US$800. The Reno series helped OPPO rank first in the US$400-600 market share. OnePlus will buck the trend and grow in 2023, with shipments increasing by nearly 200% year-on-year. At the same time, OPPO is constantly trying more differentiated terminal services to meet the diverse needs of users, bringing more innovative retail experiences to users.
vivo
The domestic market performed solidly. In the fourth quarter, with the concentrated launch of major new products, market performance improved significantly, and many hot-selling products continue to sell well to this day. Among them, with the continuous investment and reputation accumulation of multiple generations of products, the X100 series has helped vivo gain high recognition from consumers in the high-end market, continue to increase orders, and rank third in the market share of 600-800 US dollars in the fourth quarter. The sub-brand iQOO insists on product features in the e-sports scene and stabilizes vivo’s competitiveness in online channels. With a clear product layout, excellent system usage experience, and clear division of labor between the main brand and sub-brands, vivo will continue to develop steadily.
Xiaomi
In the fourth quarter, we were the only two manufacturers to take the lead in recovering year-on-year growth. The Xiaomi Mi 14 series continues the excellent reputation of the previous generation products, helping Xiaomi stabilize its position in the market with prices above US$600. The Redmi K series and Note series are still the main forces driving Xiaomi’s shipments. Self-research and comprehensive cooperation with domestic supply chains will effectively help Xiaomi establish its high-end brand image. In the future, the formation of a closed-loop "ecosystem of people, cars, and homes" will make Xiaomi's competitiveness not limited to the mobile phone market.
K-shaped differentiation in price segment continues
In 2023, China's smartphone market price segment will continue the K-shaped differentiation trend. The market share of high-end products priced above US$600 reached 27.4%, a year-on-year increase of 3.7 percentage points; at the same time, the share of the low-end market priced below US$200 recovered to 27.5%, a year-on-year increase of 5.2 percentage points. While high-end consumers maintain their purchasing power, more mid-range users are beginning to upgrade to flagship products to extend the replacement cycle; creating a thousand-yuan 5G premium mobile phone, focusing on appearance and ensuring smooth use of the three major application scenarios of social networking, shopping, and short videos, will attract more offline low-end consumers.
Analyst Views
IDC China senior analyst Guo Tianxiang pointed out that although China's smartphone market has returned to a growth trend, it should still remain cautiously optimistic about market performance expectations in 2024. The last wave of consumers who purchased phones during the peak shipment period in the second half of 2020 will gradually enter the replacement cycle from the first half of this year, which will become the basis for this year's market rebound. The recovery of the country's overall macro-economy and residents' spending power, as well as whether it can effectively stimulate consumer groups in tier 4-6 cities to replace their phones, will become key factors affecting the height of the market rebound. Operators will still promote the popularization of 5G terminals, which will also be conducive to the rebound of the market. However, it is difficult for the product itself to have the emergence of technologies that can significantly drive the demand for phone replacement. Satellite communications and large AI models will not become rigid consumer demands in the short term to drive large-scale phone replacement. It is recommended that the entire industry still needs to maintain a conservative and pragmatic operating strategy, control inventory, and stabilize cash flow; manufacturers should establish long-term development goals and insist on investing in high-end products and folding screen products. While building a high-end brand image, they can also strengthen cooperation with operators and effectively utilize operator resources.