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4 September 2023

Smartphone production falls 6.6% year-on-year to 272 million in Q2; first-half 2023 down 13.3%

After plunging by a record 19.5% year-on-year in first-quarter 2023, global smartphone production saw a second consecutive quarterly decline in Q2/2023, falling by about 6.6% year-on-year to 272 million units, according to market research firm TrendForce. First-half 2023 production was 522 million units, down 13.3% year-on-year. This represents a ten-year low for both individual quarters and the first half of the year.

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  • the easing of pandemic restrictions in China failed to spur demand;
  • the demographic dividend from the emerging Indian market has yet to translate into tangible demand;
  • initially, it was estimated that brands would return to normal production levels as excess inventory was cleared, but the current economic downturn has kept consumer spending in check, undermining first-half production more than expected.
  • Transsion overtakes Vivo to enter top five; Q2 production surges by over 70% In a dramatic shake-up of global rankings, Transsion (including TECNO, Infinix, and itel) eclipsed Vivo to secure the fifth spot for the first time. Transsion’s high production output benefited from a trifecta of inventory replenishment, new product launches, and its entry into mid-to-high end-markets, notes TrendForce. Demonstrating robust production performance since March, the firm’s growth trajectory is poised to extend its momentum into Q3/2023. Meanwhile, Vivo (including Vivo and iQoo) is treading cautiously amid a sluggish global economy, which is evident in its conservative production plan: Vivo produced 23 million units in Q2 — a modest quarterly increase of 15% — and hence slipped to sixth place in the global rankings.

    Apple closes gap with Samsung, vying for global market leadership in 2023

    Samsung continues to lead in production rankings, delivering 53.9 million units in Q2. However, it suffered a 12.4% quarter-to-quarter downturn. Amid global economic headwinds and fierce competition, coupled with a waning halo effect from its flagship phone releases earlier in the year, Samsung’s Q2 performance lagged behind the same period last year. Although Samsung is set to roll out new foldable models in Q3, the impact on its overall growth is expected to be marginal, given the relatively low sales volume compared with its Galaxy S series. Apple’s Q2 is typically the weakest quarter in terms of production, due to its transition between older and newer models. Output fell by 21.2% quarter-to-quarter to 42 million units in Q2/2023. The upcoming iPhone 15/15 Plus could face headwinds due to suboptimal yields in its CMOS image sensors, potentially impacting its Q3 production performance. Intriguingly, Apple and Samsung are neck-and-neck in their annual production projections. Should the iPhone 15 series outperform market expectations, Apple stands a good chance of ousting Samsung from its long-held position as the global market leader, reckons TrendForce. Xiaomi (including Xiaomi, Redmi, and POCO) produced 35 million units in Q2 — a staggering seasonal uptick of 32.1%. This boom can be attributed to a strategic depletion of channel inventory coupled with the allure of new product launches. However, Xiaomi’s channel inventory still runs high, setting the stage for a Q3 that is likely to mirror its Q2 performance. On the other side of the spectrum, Oppo (including Oppo, Real, and OnePlus) primarily rode the wave of rebounding demand in Southeast Asia and other regions in Q2, so production was about 33.6 million units — marking a seasonal leap of 25.4%. With seasonal demands on the horizon, Oppo’s Q3 production is poised for estimated growth of 10–15%, primarily targeting markets in China, South Asia, Southeast Asia, and Latin America, hot on Xiaomi’s heels.

    Overall economic recovery remains unclear; smartphone production may be further reduced in second-half 2023

    Demand in consumer markets such as China, Europe and North America has not shown a significant rebound as we move into second-half 2023. Even if economic indicators in the Indian market improve, it is still difficult to reverse the global decline in smartphone production. TrendForce says that the smartphone market may have undergone another shift in Q2 this year due to poor global economic conditions, so production for second-half 2023 may consequently be further reduced. Looking ahead to 2024, the current economic outlook is not optimistic. TrendForce maintains its forecast of an annual increase in global production of just 2–3%, depending on regional economic trends. Whether this will further drag down production remains to be seen. See related items:

    Smartphone production falls by record 19.5% year-on-year to ten-year quarterly low of 250 million units in Q1/2023

    Smartphone production in Q3 down 11% year-on-year

    Smartphone production falls 6% in Q2 to 292 million

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