Smartphone market breaks losing streak

1.2% growth in Q3.

The global smartphone business recovered slightly in Q3 following five consecutive quarters of declines with Huawei shipments defying sanctions reaching a record high during the period. Samsung remained in the top spot globally while iPhone sales continued to decline.

The results mark the first year-over-year increase since the first quarter of 2018. And while Samsung retained top ranking, Huawei was the standout performer during Q3, with shipments surging 14.8 million units to reach 66.8 million. This was a rise of 28% compared to one year earlier and represented the most smartphones the company has shipped during a single quarter.

Huawei’s volume increase was driven however by strong demand from the domestic Chinese market IHS Markit Technology analysis director, Jusy Hong said. “The company’s smartphone shipments in China increased 65% percent in Q3, with its strong home-field performance more than compensating for overseas sales, which fell due to US sanctions,” Hong said.

While Huawei’s overseas shipments fell on a year-over-year basis in Q3, these shipments expanded compared to Q2. The company is engaging in promotional activities designed to mitigate shipment declines in regions like Western Europe.

Huawei is on a growth streak in 2019, with the company’s smartphone shipments for the first three quarters of the year totaling 184.6 million units, its biggest shipment volume for the first nine months of any year.

However, Hong warned that sanctions could begin to take a toll in the future.

“As US sanctions continue, Huawei is prohibited from including Google Mobile Services on new smartphones going forward. The launch of the Mate 30 series was the first sign of Huawei devices without Google services and it will face increasing difficulties in some markets if its new smartphone models cannot include Google services.”

Hong noted that Huawei’s existing devices can still launch with Google services and as a result Huawei is expected to focus on these models to defend the overseas market.

Samsung Electronics retained the top spot globally with a 10% percent increase in shipments over the same period last year while market share increased two percentage points to 22%.

The Galaxy A-series has been contributing to Samsung’s increased volume, with the product line focusing on improved capabilities and offering mid-level and low-priced products at various price points. Samsung has increased shipments of models produced by outsourced manufacturers, allowing it to offer cheaper smartphones that can compete with Chinese competitors’ low-priced products.

Meanwhile, Apple shipped a total of 45.9 million iPhones during Q3, a 2.1% decrease from the same period in 2018 and continued Apple’s unit decline for a fourth consecutive quarter. However, Apple was able to limit the rate of unit volume decline to single digits with market share in Q3 on 13%, up from 11% in the previous quarter.

Sales of new iPhones in Q4 are expected to increase year-on-year, thanks to the reduced entry-level price of iPhone 11 to less than $700. Apple also improved the camera functions on its new models, addressing key user demands. In addition, a $150 price reduction of existing models is expected to contribute to overall shipment volume growth in Q4. This new pricing policy is intended to expand the addressable market for Apple’s content services now rolling out to consumers.

Motorola and LG shipments also declined in Q3 2019, by 9% and 28% respectively.

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