FB Pixel no scriptChina smartphone shipments slump toward 10-year low | KrASIA

China smartphone shipments slump toward 10-year low

Written by Nikkei Asia Published on   2 mins read

Consumer shift toward thrift compounds structural weakness in demand.

Smartphone shipments in China are on track to fall to their lowest point in a decade this year as market saturation, longer waits between upgrades, and increasingly budget-conscious consumers combine for what could prove a prolonged downturn.

In the first half of the year, smartphone shipments in the world’s largest market sank 21.7% on the year to 134 million, according to the China Academy of Information and Communications Technology.

Data from Canalys shows substantial declines for big Chinese players Oppo, Vivo, and Xiaomi.

“The full-year shipment projection could end up well below 300 million units, making for the worst performance since 2012,” the research company said in a report.

The demand drop-off was noticeable during a visit to a store of a major smartphone maker in a Guangzhou shopping center. “Consumers are keeping a tight grip on their purse strings. Sales aren’t great,” a staffer said.

A number of stores there were offering discounts of around 200 yuan (USD 30). While some workers said this was a typical summer sale, others said they had offered complimentary accessories last year before switching to cutting prices this time around.

A high penetration rate has left the market with less room for growth. About 66% of China’s population has smartphones, according to Dutch research company Newzoo.

Consumers are also upgrading handsets less frequently. “It used to be 16 to 18 months, but recently it’s been 36 months,” a Vivo executive said.

The economic disruption caused by China’s zero-COVID policy is also playing a role, with buyers not inclined to spend as freely as before.

“The COVID outbreak and the lack of product upgrades in the midrange and high-end segments restrained consumers’ willingness to spend,” research company IDC said.

The cooling market is hitting the earnings of parts suppliers. Shenzhen Goodix Technology, which makes mainly semiconductors for smartphones, said it expects net profit to plunge roughly 95% on the year in the first half of 2022, citing a significant drop in demand along with increased supply chain costs.

The impact of the demand slump extends beyond China. Despite the technology-related tensions between Washington and Beijing, Chinese smartphone makers buy electronic components from many companies in the U.S., as well as in Taiwan and Japan, and chipmakers are already starting to see inventories build up.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.



Auto loading next article...