Unfold the versatility in smartphone industry

The smartphone industry continues to experience significant growth and penetration in various countries and regions worldwide.?Emerging markets, particularly in regions such as Asia, Africa, and Latin America, have been instrumental in driving smartphone penetration. These markets offer substantial growth opportunities as smartphone adoption continues to rise.

The United States has the highest smartphone penetration rate, with around 81.60% of its population owning a smartphone. This is followed by Japan with a penetration rate of 78.60%.

India, with its massive population, has a smartphone penetration rate of 46.50%, indicating significant growth potential for the market.

In terms of competition, the smartphone industry is highly competitive, with top players vying for market share. Key competitors include industry giants such as Samsung, Apple, Xiaomi, Huawei, and Vivo. These companies continue to innovate and introduce new devices with advanced features to attract consumers in different price segments.

IDC predicts that the market will not fully recover until 2024 when it expects 5.9% Y/Y growth, followed by low single-digit growth leading to a five-year compound annual growth rate (CAGR) of 2.6%.

The Smartphones market is projected to generate a revenue of US$0.48tn in 2023, and it is anticipated to grow at a compound annual growth rate (CAGR) of 2.54% from 2023 to 2028. China leads in revenue generation, with US$119.20bn expected in 2023. On a per capita basis, the revenue is estimated to be US$62.36bn in 2023. The volume of smartphones sold is expected to reach 1.70bn units by 2028, with a growth rate of 1.9% in 2024. On average, each person is expected to own 0.21 smartphones in 2023 in the Smartphones segment.

The forecasted compound annual growth rate (CAGR) for the global smartphone market can be attributed to several factors such as the rise in disposable income, advancements in telecom infrastructure, and the emergence of budget-friendly smartphones. Asia is expected to see the most significant growth in the smartphone market due to these factors and an increasing number of product launches.

VENDOR MARKET SHARE

At the high end of the market, back-and-forth between Apple and Samsung is common, but the competition for the remaining positions among the top five vendors is fierce. The Chinese smartphone manufacturer Huawei originally had a tight hold on this position and briefly led the industry, but trade restrictions have severely hurt Huawei. The void created by Huawei's collapse has mostly been filled by other Chinese producers.

For instance, Xiaomi's market share for smartphones in Europe increased from 10% in the first quarter of 2020 to up to 24% in the second and third quarters of 2021.?

Apple and Samsung continue to dominate the smartphone market, with Apple leading by a small margin. Xiaomi experienced a slight decline in market share, while OPPO and vivo saw modest growth. The overall market appears to be highly competitive, with various smaller brands collectively comprising a significant portion of the market share.

Since 2013, Apple and Samsung have consistently dominated the smartphone market, surpassing Nokia in both cases. Apple and Samsung have alternated positions over the previous 12 months. Up until October 2021, Samsung held the market's top spot; however, Apple has since surpassed Samsung. Samsung, however, took back control in March 2022, and ever since then, the two businesses have alternated positions every few months.

The Galaxy series, the first of which was introduced in April 2009, is the primary range of smartphones produced by Samsung. The coronavirus (COVID-19) epidemic caused a significant decline in Samsung's shipment volume. In the second quarter of 2019, the corporation delivered 75.5mn units; by the second quarter of 2020, that number had dropped to 54.2mn units.

Samsung supplied close to 258mn smartphones globally in 2022, indicating that they may be recovering from the decline in smartphone shipments from 2020 to 2022.

With the firm distributing more than 225mn iPhones globally in 2022, Apple is a significant producer of smartphones in the globe. Apple's sales are notoriously cyclical, peaking every year in the fourth quarter, much like in the fourth quarter of 2021, when they surpassed all other companies to ship the most iPhones globally with almost 84mn units.

With 11.72% of the overall market share, Xiaomi is the third-largest smartphone brand. Prior to 2017, the company, which was launched in 2010, barely held 2% of the market. To conclude 2017 with 4.75%, it doubled its share that year. With 6.37% and 5.1% of the market share, respectively, Oppo and Vivo are in second and third. With a 4.12% market share, Huawei is the sixth-largest smartphone maker.

In past years, Huawei's market share may have reached 20%; however, due to competitively successful rivals and the consequences of the U.S. trade embargo, Huawei is no longer among the top five smartphone suppliers by shipping.

Four out of every five cell phones used worldwide are made by these six companies, who control 83.85% of the global smartphone market share. It is interesting that, with the exception of Apple, all major phone manufacturers are based in Asia, notably China and South Korea.

- Deepkumar Shah (CrispIdea Analyst)

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