Chinese smartphone production in decline for 8 months straight in 2023

China’s smartphone production has faced a persistent decline for eight months straight throughout this year, casting a shadow over the industry. However, there’s a glimmer of hope on the horizon as Huawei Technologies defies US sanctions by introducing new 5G handsets, potentially breathing life back into the world’s largest smartphone market. As per data published by the Ministry of Industry and Information Technology, China produced 679 million smartphones from January to August this year, marking a 7.5 per cent drop compared to the same period in 2022. Simultaneously, smartphone sales on the mainland have experienced a 4 per cent year-on-year decline during the first eight months of 2023, according to insights from the reputable market research firm Counterpoint. The second quarter of 2023 witnessed China’s smartphone consumption hitting its lowest sales figures since 2014, primarily due to macroeconomic challenges impacting consumer sentiment. Counterpoint’s July report pointed out a “relatively weak performance” in handset sales during China’s 618 shopping festival last June. The sluggish performance of the market reflects the persistently low consumer sentiment amid the country’s turbulent post-pandemic economic recovery, fueled by a property crisis, record youth unemployment rates, and waning confidence in the private sector. However, there’s a silver lining on the horizon. The market’s outlook for the rest of 2023 appears more promising, thanks to the introduction of new smartphones by both Huawei and Apple, along with the approaching winter sales season, according to Ivan Lam, a senior research analyst at Counterpoint. Huawei, based in Shenzhen, has unveiled its Mate 60 Pro series of 5G handsets, which have significantly bolstered confidence in China’s smartphone market. Counterpoint estimates that sales of Huawei’s latest 5G smartphones could reach between five to six million units by the year’s end. This optimism stems from Huawei’s substantial domestic user base of HarmonyOS, an alternative mobile operating system to Android. Lam emphasizes that Huawei’s new 5G devices are poised not only to attract new customers but also to win back former users who had switched to other smartphone brands in recent years. Notably, Huawei’s smartphone sales have already witnessed a remarkable 41 per cent surge in the first eight months of 2023 compared to the same period last year. Moreover, Huawei’s resurgence has been further highlighted by its recovery from a strained supply chain, allowing the company to return to its regular product launch schedule. In a somewhat surprising move, Huawei quietly initiated pre-sales campaigns for its new Mate 60 Pro 5G handset in late August, followed by a similar online pre-sales process for its top-of-the-line Mate 60 Pro+. Prior to the Mate 60 Pro series, the Mate 40 series released in October 2020 was the last 5G smartphone line produced by Huawei. These new 5G handsets from Huawei, including the recently unveiled Mate X5 foldable model, are powered by an advanced, domestically-produced processor called the Kirin 9000s. Intriguingly, the details of this processor have been closely guarded by the privately-held company. Recent third-party examinations of the Mate 60 Pro have indicated that Semiconductor Manufacturing International Corp, a U.S.-sanctioned Chinese chip manufacturer, played a significant role in developing the “breakthrough” chip. On a parallel track, Apple’s new iPhone 15 series has generated substantial interest in China, evidenced by long queues at stores, dispelling doubts about the U.S. tech giant’s ability to maintain its foothold in the face of Huawei’s resurgence and the partial ban on iPhones in government agencies. The competitive landscape in China’s smartphone market continues to evolve, with Huawei and Apple at the forefront of this dynamic arena.