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Global smartphone production volume to grow just 4.5% annually in 2017

Global smartphone production volume to grow just 4.5% annually in 2017

Date: 19 November 2016 11:34

Global market research firm TrendForce has lowered the projected annual growth rate of smartphone production worldwide for 2016 to 2.5%. Though shipments from Chinese smartphone brands have been fairly strong, other international brands have suffered significant shipment declines, thus constraining the growth in the overall production.
 
Looking ahead to 2017, global smartphone production volume is forecast to reach nearly 1.4 billion units, an increase of around 4.5% compared with the prior year. Double-digit growth that took place in the past years will not return as the smartphone market faces challenges in terms of developing new and innovative applications for devices.
 
"Owing to large shipment growths from OPPO and Vivo, about 45% of smartphones produced worldwide this year – around 600 million units – belong to Chinese brands," said TrendForce analyst Avril Wu. "However, growth in OPPO’s and Vivo’s smartphone production volumes could be reaching a plateau this year. Since both brands focus mainly on their domestic market and lack visibility in foreign markets, they will have difficulty in maintaining strong growth momentum in 2017."
 
For 2017, TrendForce forecasts that combined smartphone production volume of Chinese brands will total around 634 million units, representing 45.6% of the annual global production volume. Collectively, Chinese brands are expected to register flat growth in annual production next year. Performances of individual companies, on the other hand, will depend on their overseas expansion efforts. To establish a presence in foreign markets, Chinese brands will need to obtain the necessary IPs as well as support from local telecom companies. Failing to do these things will confine them in their home market, where market share growth is difficult to achieve and margins are being squeezed by the fierce price competition.
 
Samsung has focused on promoting its Galaxy S7 devices as a way to keep up its smartphone production during this fourth quarter. This move is also a response to the massive loss of confidence in the brand following the discontinuation of the fire-prone Galaxy Note 7. Samsung’s main challenges in the smartphone market next year will be to regain consumers’ trust in the large-size segment and continue to make advancements in the hardware of their devices.
 
Apple is projected to post an annual decline of 11.5% in its iPhone production volume for 2016. Though iPhone sales remain sluggish this year, Wu pointed out that the smartphone supply chain and consumers are looking forward to the next iPhone that will be released in 2017.
 
"Upgrades for the next iPhone may include an AMOLED display, all-glass casing, more DRAM, narrow bezel, the removal of home button and so on," noted Wu. "Consumers’ interests in the next iPhone will provide an opportunity for Apple to gain grounds in the smartphone market in 2017. TrendForce’s latest analysis indicates that Apple’s iPhone production volume for 2017 will increase by around 8.9% compared with the prior year."
 
Wu pointed out that sales of iPhone have fallen below expectations mainly because Apple did not make a significant upgrade to the display of iPhone 7. "Consumers are now anticipating major advances for the 2017 release. There are reports that the large-size model of the next iPhone will have an AMOLED display as well as an all-glass casing, thus making its design radically different from the previous generations."
 
Besides Apple, Samsung is expected to significantly increase the number of devices equipped with AMOLED displays within its smartphone offerings as well. Samsung, which has the advantage of obtaining AMOLED panels in house, will continue to feature the technology for its upcoming flagship Galaxy S8, as well as for other mid-range and high-end models.
 
Chinese smartphone brands are also jumping on the AMOLED bandwagon. However, the penetration of this technology in their offerings will be limited because of Samsung’s monopoly over the supply of small-size AMOLED panels. TrendForce forecasts that the penetration rate of AMOLED displays in the global smartphone market will reach around 28% in 2017 and rise to 40% or above in 2018, when LG Display will also begin to supply small-size AMOLED panels.



Tags:  Global smartphone production volume to grow just 45 annually in 2017



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