The summer of 2023 is coming to an end, but the winter of the smartphone market is not over yet.

According to the latest research from data agency Canalys, global smartphone shipments in the second quarter of 2023 fell by 10% year-on-year to 258.2 million units. Shipments in the first quarter amounted to 269.8 million units, representing a year-over-year decline of 13%. The pace of the year-over-year decline slowed.

However, according to research data from Counterpoint Research, the replacement cycle for smartphones in 2022 is still as long as 43 months. In the downturn trend of the global market, the growth of foldable phones, the expansion of Transsion, and the popularization of high-capacity and high-memory phones have become key factors supporting the confidence of the entire smartphone industry.

Domestic foldable phones break Samsung's monopoly

Credit: Visual China

With the continuous advancement of technology, the demand for foldable phones in the market is gradually increasing. According to data provided by DSCC, global foldable screen phone shipments increased by 16% compared to the previous quarter and 42% year-on-year in the second quarter of 2023, reaching 2.2 million units. Samsung, with a 32% market share, beat Huawei with a narrow margin. Huawei’s market share was 30%.

In China, according to Counterpoint, the shipment volume of foldable screen products reached 1.02 million units in the first quarter, a year-on-year increase of 52.8%.

In terms of the supply chain, although Samsung's foldable screens accounted for 63% of all foldable smartphone and panel shipments, this was the brand's lowest market share since the first quarter of 2021.

Since Chinese company BOE achieved mass production on the country's first 6th generation flexible AMOLED production line in Chengdu in 2017, breaking Samsung's monopoly. Subsequently, the establishment and mass production of flexible AMOLED production lines by domestic panel manufacturers such as TCL Huaxing and Visionox further promoted the rapid popularization of foldable phones. The breakthrough of domestic panels has transformed the foldable screen phone market from a monopoly to a diversified market.

With the continuous growth of foldable phones, the expanding market size has lowered the entry barrier for smartphone manufacturers to enter the foldable screen market. Currently, many domestic brands such as Huawei, Xiaomi, OPPO, and Vivo have launched foldable phones.

According to CINNO, , the sales proportion of products priced above 15,000 yuan has decreased from 62% in 2021 to 21% in the 2022 Chinese foldable phone market. The sales proportion of products priced between 10,000 and 14,999 yuan decreased from 20% in 2021 to 10% in 2022. The sales proportion of products priced between 5,000 and 9,999 yuan significantly increased from 18% in 2021 to 69% in 2022, taking the lead.

It can be said that the prices of a majority of foldable phones are below 10,000 yuan in 2023.Credit: TMTPost

TMTPost has compiled a list of foldable screen suppliers based on the past year's releases. It can be seen that Samsung's foldable screens are still the mainstream, but more and more brands are starting to use Chinese domestic panels . Among them, BOE has applied flexible OLED display technology to many high-end flagship models both domestically and internationally. For example, both the vivo X Flip, released in April this year and the Magic V2, launched by Huawei Honor in July, used a BOE-made screen, which has a folding capability of over 400,000 times.

According to DSCC, the average price of foldable panels in 2020 is around $130, and it is expected that the cost will be reduced by half by 2024. The acceleration of Chinese domestic products replacing foreign brands’will further reduce the cost of foldable screens, and China's high-end screens will go global with this technology.

The "African King" in Phone Market

Credit: Visual China

The impression that Transsion's mobile phones have given to the outside world all along is that they are "quietly making a fortune" in Africa: focusing on mid-to-low-end products and only targeting the markets of third world countries. Limited by affordability, although the African continent has a large population, its overall smartphone shipments are not large.

Therefore, Transsion has always been unable to get rid of the status of "invisible champion". Although it is nicknamed the "King of Africa", it has always been unknown in the global shipment rankings of major data agencies.

In 2023, with outstanding performance in the Middle East and Africa markets, Transsion entered Canalys' sales top list in the second quarter, ranking fifth in the world with a shipment volume of 22.7 million units and a market share of 9%, following Samsung, Apple, Xiaomi, and OPPO.

Compared with the shipment volume of 18.5 million units and a market share of 6% in 2022, Transsion grew against the trend by 22%. According to IDC reports, Transsion (including sub-brands Tecno, Itel, and Infinix) had the largest share of Africa's smartphone shipments in the first quarter of 2023, with Samsung ranking second and Xiaomi ranking third. Canalys analyst Amber Liu said that Transsion quickly seized the suppressed demand in the African market, and stable foreign exchange supported the confidence of channel partners.

In addition, Transsion has expanded in the Middle East and Latin America in the past few quarters, enabling suppliers to open up new situations in some markets with insufficient penetration.

In the Latin American market, according to Canalys data, Transsion was on par with Xiaomi and Apple in the second quarter of 2022, with a market share of around 14%. By the second quarter of 2023, Transsion had supassed its competitors with a growth rate of 29%, becoming the second in the Middle East market with a market share of 18%.

Transsion is also actively exploring the high-end market. In the Mobile World Congress held in February this year, Transsion released its first foldable screen smartphone, PHANTOM V Fold, and demonstrated its unique color-changing technology for the phone's back cover. Users can choose from 1600 different back cover colors, and the color change can be repeated about 2 million times, with a color change time of only 0.03 seconds. However, Transsion has not yet revealed when this technology will be commercialized.

The PHANTOM V Fold adopts a horizontal folding scheme, with an inner screen size of 7.85 inches and a resolution of 2296*2000. The outer screen size is 6.42 inches, and both the inner and outer screens support adaptive refresh rates of 10-120Hz. Transsion stated that the inner screen has a folding lifespan of 200,000 times. The PHANTOM V Fold uses the SoC of Dimensity 9000+, and has a built-in 5000mAh battery that supports 45W wired charging. The weight of the device is 299g. The starting price of the PHANTOM V Fold is 89,999 Indian rupees, which is approximately 7,517 yuan.

According to Transsion Holdings' semi-annual performance forecast, it is expected to achieve operating revenue of 25.029 billion yuan in the first half of 2023, an increase of 8.31% year-on-year. Among them, the estimated operating revenue for the second quarter is 15.756 billion yuan, a year-on-year increase of 30.72%.

Transsion Holdings stated that this is mainly due to a slight improvement in the overall economic environment of emerging market countries, the company's continued expansion into emerging markets, and the promotion of product upgrades, resulting in an overall increase in shipments.

Large Capacity and Memory Products Becoming Mainstream

At the product level, with the consumers' increasing demands for smartphone performance, and more data brought by the era of video, smartphones with large memory (RAM) and large capacity (ROM) have gradually become the mainstream in the market.

Lei Jun delivered the annual speech on August 14, officially releasing the Redmi K60 Supreme Edition, and also introducing a 24GB+1TB super memory version, with a first sale price of 3599 yuan. At the same time, brands such as OnePlus, iQOO, and Realme are also promoting the selling point of large capacity + large memory.

The components corresponding to RAM and ROM are DRAM (Dynamic Random Access Memory) and NAND (flash memory) respectively. The reason why smartphones with large storage capacity have become the mainstream in 2023 is because the prices of upstream components continue to decline.

According to the latest data from market research firm TrendForce, the average price of DRAM memory used in mobile phones and personal computers plummeted by 34.4% in the fourth quarter of last year, the largest drop since 2008, and the decline in the previous quarter was 31.4%. The main products sold to data centers and enterprise customers, namely NAND flash, fell by 27.7% and 32% respectively, with the largest decline since 2008 for both quarters.

In 2023, according to Gartner, DRAM will be in oversupply for most of 2023, a trend that will continue until the third quarter; DRAM revenue will decline by 44.4% to 43.8 billion US dollars in 2023, and the overall average selling price (ASP) will decline by 50.4%. Jong-Won Noh, CFO of SK Hynix, said at the end of July's earnings conference call thatthe inventory level of NAND is high, and production will be further reduced by 5% to 10%.

Currently, multiple manufacturers and analysis institutions believe that smartphones have the potential to come at a turning point in the second half of the year.

Firstly, Apple will release the all-new iPhone 15 series products in mid-September, and the Pro version will be the first to adopt TSMC's 3nm process. This will significantly improve the performance and power consumption of the new iPhone. It can be expected that this will trigger an arms race in terms of computing power, gaming, fast charging, and battery life in the smartphone industry. As for Huawei, rumors have it that the Mate60 series will be equipped with the next-generation product of satellite communication—satellite calls, which may open up a new market in the industry.

In addition, with the development of artificial intelligence technology, the application of large models on smartphones is becoming more and more widespread. For example, Google's early Transformer model has implemented real-time translation function on Pixel phones, and Huawei and Xiaomi have also introduced their own large model products and applications in voice control at their press conferences.

Currently, although the integration of large models into smartphones cannot completely change the user experience, with the continuous maturity of large model technology, its applications on smartphones will be more diverse and varied, and smartphones have more possibilities in the future . (This article was first published on the TMTPost App. Author/Wu Honglei and Editor/Zhong Yi)