Sales in smartphone units globally fell between 9% and 11% last year, remaining at about 1.24 billion, according to the provisional results of several consulting firms. These are somewhat better figures than those forecast towards the middle of the year, after a catastrophic first quarter, in which smartphone supplies fell 25% compared to the same quarter of the previous year. By contrast, 5G smartphone supplies have fared better than expected, representing more than 20% of the total, thanks to the pull of the Chinese market and its low prices. For this 2021, the expectation is that the world sales of smartphones will almost increase what they have fallen in 2020, which will touch, although it will not reach, the 2019 figures of 1,400 million units.
The provisional results of the smartphone market during 2020 that are being known from the different consultancies coincide in highlighting the sudden monthly fluctuations in sales, in parallel to the different waves of the pandemic, which have decisively influenced the results of each period. In the first quarter there was an overall drop in unit sales of over 20% compared to the same period of the previous year, followed in the second quarter by an increase of almost double digits. In the third quarter there was a slight decrease in the units shipped and in the fourth quarter sales rose timidly compared to the previous year.
The evolution of smartphone sales during 2020, apart from being very erratic, was very different in each geographical area. The Chinese market has been the one that has suffered the most in 2020, with a global fall in the smartphone market of 20.4%, remaining at 295.7 million units, according to official figures. This sharp contraction in the Chinese market contrasts with strong growth in 5G smartphone sales. About 55% of all models shipped in 2020 in China were 5G, 163 million units.
It is estimated that 1.25 billion smartphones will have been sold in 2020, compared to 1.4 billion in 2019; for this year it could reach 1,360 million units, despite the many existing unknowns
In 2020, 1,240 million smartphones were shipped globally, 8.8% less than the previous year, according to the Taiwanese consultancy Digitimes. Of this total, between 280 and 300 million units have been 5G, compared to about 20 million units shipped in all of 2019. This means that about more than a fifth of all smartphones sold last year in the world They were 5G, when in 2019 they barely represented 1%, thanks to the strong momentum of the Chinese market in 5G.
The consulting firm Trendforce handles data very similar to Digitimes, although the percentage drop in smartphones supplied increases slightly. For Trendforce, which records the units produced instead of those delivered to the commercial channel, a total of 1.25 billion smartphones were manufactured throughout 2020, with a decrease of 11% compared to the 1.4 billion units that it estimates were manufactured in 2019, always in round and provisional numbers. In any case, they are better results than expected a few months ago. https://on5g.es/se-preve-vender-250-millones-de-smartphones-5g-este-ano-el-70-en-china/
By 2021, Trendforce’s estimate is that 1.36 billion smartphones will be produced. This would represent an increase of approximately 9% compared to the data for 2020 and would be close to the figure for 2019. The consultancy firm estimates that 235 million 5G smartphones will have been produced in 2020, 19% of the total, and by 2021 it would be 500 million units, with which 5G models would have a 37% share of the total.
Digitimes and Trendforce figures differ because the first measures the units supplied to the channel, not necessarily sold to the end user, and the second those that have been manufactured in the calendar year, apart from being estimates. In the last quarter of 2019, fewer units were sold than expected, leaving the stores of the commercial channel more full, and this caused, pandemic aside, a lower number of orders in the first quarter. Then, with the pandemic raging in different ways in different markets, with factories and stores closed, the mess has been total. With what has happened in 2020, a drop in smartphone sales of around 10%, if confirmed, can be considered good.
The top graph of Trendforce, from this month of January, shows that already in 2019 there was a drop in global smartphone sales, from about 1,450 million units in 2017 and 2018 to about 1,400 million in 2019, to later fall in 2020 to the estimated 1.25 billion units, so the decline in 2020 is not new either. The forecast of 1.36 billion units for 2021, on the other hand, is plagued by unknowns, because to the unpredictable evolution of the pandemic this year and the effect of vaccines must be added the current shortage of components in the world market. Several automakers, for example, have had to shut down parts of their production lines because they are missing semiconductors.
The pandemic has also triggered laptop sales this 2020, with consequent chip supply problems worldwide. The trade war between the United States and China, with the Trump Administration vetoing many Chinese factories and especially Huawei and ZTE, has also dismembered the logistics chain and it is not known what will happen in 2021, because Joe Biden has not done Still no mention of the trade policy that it will follow with respect to China and the serious problems that the United States is going through on all fronts suggest that China is not, for now, its main priority.
The evolution of smartphone sales in the Chinese market, the most important in the world, with nearly 100 million quarterly units in 2019, has also had a decisive influence on the world market, as seen in the lower graph from Digitimes. In the first quarter, the units dispatched in the Chinese market fell no less than 45%, remaining at 45 million, and in the second they were the same as the same quarter of the previous year, with 96 million. In the third quarter, it fell again by 25% and closed the fourth with a slight decrease compared to 2019, of 5%. Altogether, from almost 400 million shipped in China in 2019, it went down to less than 300 million in 2020.
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The historical graph of smartphone sales for the last three years from the consultancy Counterpoint also shows the anomaly in sales that Covid-19 has produced. The first quarter of 2019 was already bad, with a drop in dispatched units of 14%, but the same quarter of 2020 added another drop, of 26% according to Counterpoint. If not for the recovery in the third quarter, the decline in 2020 would have been much worse than the estimated 10%. In the graph, the decisive fourth quarter of 2020 is missing, which the consultancy is finalizing, and which is estimated to be close to 400 million units, similar to the fourth quarter of 2019.
The drop in unit sales, however, only reflects part of the story. The average price of smartphones also fell, as consumers around the world opted in 2020 towards buying cheaper models. To drive the sluggishness of the Chinese market in the second half of the year, what manufacturers did was to expand the offer of low-priced 5G smartphones, between $ 200 and $ 400, with a much better price-performance ratio.
Suppliers overturn in 2020
At the beginning of 2020, Huawei still dominated the list of top manufacturers, sharing leadership with Samsung. Google’s ban on Huawei from using its services, following the Trump Administration’s guidelines, has plunged the Chinese smartphone maker’s sales in Europe, its main market. Huawei has had to focus on its domestic market, where Chinese users do not use Google services and were not affected by the American veto in this regard, but it has had to deal with tough competition in its domestic market with other Chinese manufacturers, especially Xiaomi. , Oppo and Vivo, both with 4G and 5G smartphones, and also of excellent quality and very reasonable price.
The following table from Trendforce shows the estimated sales of 5G smartphones for the main manufacturers in 2020 and the forecast for this year. Huawei has managed to stay in third position, displaced by Apple in second thanks to the success of its 5G iPhone in the United States since it was launched in September, but it will fall to seventh position in 2021 according to the consultancy. Samsung has remained a prominent leader, with its S20 5G and other A-range models that also sell at a high price. In the second half of 2020, Samsung had to release versions of the S20 and other models, with somewhat lower performance but at a much tighter price, to keep distances with Xiaomi and Oppo.
The availability of 5G smartphones at a moderate price in the European market is expected to be high this year, with high performance and a price between 400 and 600 euros
Samsung’s situation is very complex this year, as the figures to the right of the table illustrate. Samsung is expected to maintain its sales level of 265 million units in 2021, but with Xiaomi, Oppo and Vivo closing the gap by leaps and bounds, because they also want to become strong in Europe, apart from China. Meanwhile, Apple will continue to dominate the 5G smartphone market in the United States and Canada, which will help it have a large market share and an average price of all its iPhones, including 4G, very high and highly profitable.
The big loser that TrendForce foresees for this year is Huawei, with estimated sales in 2020 of 170 million units, which would plummet to 45 million in 2021. However, it is still too early to determine whether it is feasible that these forecasts are met. , due to the many unknowns. To begin with, Huawei has sold its second Honor brand to another Chinese company to try to circumvent the American veto and be able to buy the chips it needs. Huawei is also investing extensively in advanced chip manufacturing with its subsidiary HiSilicon and diversifying its supply sources with Japanese, European and Taiwanese chips.
It is not certain, but Huawei should be able to acquire chipsets from MediaTek and the Chinese manufacturer Unisoc for the simpler models, since it is not expected to have many Kirin chipsets that TSMC had manufactured until September, the core of its 5G smartphones of higher range. elevated. The next few months will be decisive for Huawei and it is not ruled out that the Chinese government will put maximum pressure on Taiwan for TSMC to sell it chips, even indirectly those it manufactures for MediaTek, and that the issue will be a priority in trade negotiations between the governments of China and the United States. It remains to be seen the accumulated stock of components that Huawei still has but it should not be very high; Among other factors, because its 5G base stations, the company’s other great product, also need many chips and world production is not enough, vetoes aside.
Saturation of mid-priced smartphones
The Galaxy S21 presented today by Samsung worldwide and shown in the image above will rank as the most advanced 5G smartphone, well ahead of Apple’s iPhone. But sales of the most exclusive products are declining, because the economic and social crisis is causing an exodus of consumers towards mid-range and low-end smartphones. This year, a majority of the sales will be of 5G models, but with a price in Europe between 400 and 600 euros. A spectacular drop in the average price of 5G smartphones has already taken place over the past year, as shown in the graph below from GSMA Intelligence, and is expected to continue to decline.
MediaTek and Qualcomm are currently the world’s two leading manufacturers of chipset for smartphones, the fundamental core of these devices. MediaTek has the very competitive Dimensity 700 and 800, with an integrated 5G modem, with prices much lower than the 800, 700 and 600 series of its main competitor, Qualcomm. To improve its position, Qualcomm has presented the SnapDragon 480 chipset, with an integrated 5G modem, which will be able to compete in price with those of MediaTek and have smartphones around $ 350.
With the launch of the Galaxy S21, Samsung joins the race for very high-performance 5G smartphones with its most advanced chipset, the Exynos 2100, which should help to maintain its high share in the European market, although probably in the models destined to the United States will include Qualcomm’s 888 chipset. Samsung has advanced the release of the S21 a month compared to the traditional calendar, to also curb the momentum of the iPhode 12 in the United States. The year, therefore, is an exciting year for Western consumers because they will be able to have smartphones with much higher performance, including 5G, at relatively low and more affordable prices, as Chinese consumers have been having for months. Provided that the global chip supply improves towards mid-2021 and there is not as much scarcity and prices as high as today.