Smartphone Market: Shipment In China Declines By 17% In Q2 As U.S Blacklisted Huawei Struggles, Xiaomi Remains Market Leader In India

In Q2 2021, global smartphone shipments reached 316.0 million units, representing a 9% drop against the previous quarter, as major brands struggled to secure key components to produce devices to meet demand, according to an analysis by research firm Canalys.

South Korean giant Samsung was the leading vendor globally with 58.0 million units at 8% year on year growth. Xiaomi took second place for the first time ever, with 52.8 million units at 83% growth. Apple emerged third, with 1% growth to 45.7 million units, while Oppo and Vivo placed fourth and fifth with 32.6 million and 31.2 million units respectively.

Apple saw blockbuster revenue growth for iPhone, despite a unit total which increased only 1%.

“The big difference here is the mix of iPhones selling,” said Canalys Research Analyst Le Xuan Chiew. “Apple launched the low-cost iPhone SE in April 2020, which accounted for 28% of its mix at that time. This year, with no new iPhone SE, its average selling price increased drastically."

Smartphone Shipment In China Declines

Smartphone shipments in mainland China fell by 17% to reach 74.9 million units in Q2 2021, as the number of vendors to ship more than 10 million units shrank from five to three. Vivo and Oppo remained the top two, with 18.2 million and 16.0 million units respectively, far beyond their competitors.

Xiaomi replaced Huawei to become third, and shipped 12.6 million units, with market share increasing from 15% to 17% against the previous quarter.

Apple ranked fourth, reaching 7.8 million units. Honor moved into the top five with 6.9 million units, a 40% quarter-on-quarter growth after its independence from Huawei. Huawei, itself, fell out of the top five in China for the first time in over seven years.

Honor was China’s fifth best-selling smartphone brand in the second quarter of 2021, making the top rankings for the first time since being spun off from Huawei Technologies Co. Ltd. last year.

Facing U.S. sanctions, Huawei sold its budget smartphone brand Honor to a Chinese government-backed consortium in November in exchange for the opportunity to keep the brand’s industry chain intact. Huawei continues to struggle with restrictions imposed last year, covering access to chips developed or produced using US technology, from anywhere.

“The leaders Vivo and Oppo maintained their dominance in Q2 2021. Their pillar product families, such as Y and S series for Vivo, and A and Reno series for Oppo, accounted for an aggregated 46% of the entire market,” said Canalys Analyst Toby Zhu. “Honor expanded its footprint in offline channels and is investing heavily in its supply chain, efforts which have bourne fruit. And it benefitted from positive consumer response to its Play 20 and 50 series. Taking fifth place is a nice milestone for Honor, but it still has significant ground to make up on its rivals to re-enter the upper echelon of vendors.”

Smartphone Shipment In India

Smartphone shipments in India fell 13% between Q1 and Q2 2021, to 32.4 million units, due to the second wave of COVID-19, which stifled demand. But because of Q2 2020’s two-month shutdown, the year-on-year comparison was extremely favorable, with shipments up 87%.

Xiaomi remained the market leader, shipping 9.5 million units for a 29% share. Samsung stayed in second place, shipping 5.5 million units for a 17% share. Vivo came in third with 5.4 million units shipped, while Realme overtook Oppo for fourth place, shipping 4.9 million units against Oppo’s 3.8 million.

A surge in COVID-19 cases prompted regional restrictions and economic disruption, which limited consumers’ disposable income.

“India was taken by surprise by its second wave, as the new COVID variant emerged and took hold quickly,” said Canalys Analyst Sanyam Chaurasia. “For smartphone vendors, this was a wake-up call, and shows the importance of bolstering both online and offline presences equally. Smartphone vendors in India had assumed COVID-19 would not return, and several planned to invest in infrastructure for branded stores and partnerships with third-party offline channels. But once again they were quickly compelled to pivot to an online strategy.”

“India will rebound in the second half of 2021, aided by accelerated vaccinations, as well as brands expanding promotional activities and new product releases,” said Chaurasia. “But the second half will not see a surge in pent-up demand like last year. The threat of a third wave still looms in India, but as citizen behavior and industrial operations continue to adapt to pandemic conditions, its impact should be minimal. Increasing costs will be challenging, amid limited component supply, rising shipping charges and a tough macroeconomic environment. In the short term, vendors will bear the impact of supply chain disruption, and will be conservative about raising prices. But the component shortage also brings another risk – regional deprioritization – as brands look to allocate their limited supplies of devices to more lucrative markets.”