Mobile Phone Industry Under Uncertainty: The Supply Shortage Is Likely To Continue To The End Of 2021, And 5G Switching Will Take Time

According to the statistics of a number of third-party institutions, the global mobile phone industry in 2020, whether from the perspective of production or shipment data, is the largest decline since 2016.

The year 2020, which was originally expected to be the year of recovery by the industry, was faced with new challenges such as the rising price of upstream components and the shortage of complete machines after encountering the COVID-19 epidemic and global environmental uncertainty. During this period, many mobile phone brands made rapid strategic adjustments.

The price increase of components has been continued at the beginning of 2021. This time, Huawei's adjustment has caught the potential growth space of the industry. Many manufacturers are increasing orders intensively, hoping to seize the opportunity. And the glory of being split out also calls out the slogan of being the first in the industry.

However, as chip manufacturers are actively preparing for 5G, the "lack of core" of 4G mobile phones may continue to play out, which may become a new variable in the global 5G market.

"Black Swan" sweeps the supply shortage

After experiencing the industry peak in 2017, the global mobile phone industry has shifted from a high growth stage to a cyclical era in the following years. The 5G replacement tide is undoubtedly the key to the next growth period.

In the third quarter of 2019, the global mobile phone industry ushered in its first positive growth in two years, which was once seen by industry insiders as a signal that it is expected to enter a relatively positive development zone in 2020 driven by some 5G demand.

Who would have thought that the COVID-19 epidemic that broke out at the beginning of 2020 quickly swept the world, bringing huge pressure to the global mobile phone supply chain. In the early stage, the epidemic mainly affected the smooth sales. In the later stage, it was the shortage of complete machines caused by the imbalance of supply rhythm. This is the core reason for the sharp decline of the mobile phone industry in 2020.

In this process, mobile phone manufacturers mainly responded to the sudden changes in the industry by exploring new online models such as private domain traffic and fully sinking channels. Mobile phone manufacturers that are stronger than online channels also benefit. This led to the rise in sales in the mobile phone market after the second half of the year.

Tang Ding, an analyst at Counterpoint, told the 21st Century Business Herald that it is expected that countries around the world will carry out vaccination in 2021. If the COVID-19 epidemic can be gradually controlled after the first quarter and the global economy recovers slowly, global smartphone shipments are expected to grow by more than 10% year-on-year in 2021. However, she also pointed out that "we expect the growth momentum of the Chinese market will be weaker than the global market due to the delay of the replacement cycle and the insufficient supply of Huawei or Glory products."

This means that there are still many variables under the change of global factors. In view of the different deployment processes of 5G infrastructure around the world, the large-scale replacement of 5G will not come.

Tang Ding continued, "At this stage, we expect that 5G mobile phones will account for about 40% of the global smartphone shipments in 2021, and 4G phones will account for about 60%. LTE will remain the mainstream."

Huang Yuxuan, the research manager of Jibang Consulting, also believes that, considering the global 5G base station coverage may not be more than half until 2025, it will still take a long time to realize the full high-speed transmission of the new generation.

However, these adjustments undoubtedly affected the deployment rhythm at the supply chain level. From the upstream, some manufacturers or regional markets also heard the sound of complete machine out of stock.

Tang Ding told reporters that in fact, in the second half of 2020, 4G chips have been in short supply. "In the second half of last year, affected by semiconductor capacity constraints and Huawei's priority in shipping, a variety of upstream components have been in short supply. The increase in demand of mobile phone manufacturers in the fourth quarter further exacerbated the imbalance between supply and demand of some parts. The progress of the increase in the output of different parts will be inconsistent, but it is generally expected that it will be eased in the second half of 2021."

There are also obvious feelings within the mobile phone company. "At least in the first half of 2021, 4G chips will be seriously out of stock." An insider in the mobile phone industry told the 21st Century Business Herald reporter that because mainstream chip manufacturers are actively exploring the streaming and price decline of 5G baseband chips, under the influence of the epidemic, chip manufacturers are relatively pessimistic about the size of 4G mobile phones represented by overseas markets, Therefore, the planning of 4G chips is also very cautious.

"As a result, the main force of new product development of mainstream chip manufacturers is focused on 5G. It usually takes more than half a year to plan the chip capacity, so 4G supply will not keep up." The person added that the company will take IoT as another core sales focus during this period.

As Tang Ding said, in the second half of 2020, mainstream manufacturers, including Xiaomi, OPPO and vivo, will increase their orders one after another, which is undoubtedly due to the pure market-oriented behavior of Huawei and Glory brand in the short term.

Industry insiders generally believe that these adjustments mean that other brands can capture some new share opportunities, and this time window may be fleeting.

However, it remains to be seen whether we can really seize the opportunity. A little carelessness may lead to "inventory". TrendForce Jibang Consulting pointed out that once the actual sales are not as expected or the bottleneck of the brand's own development is not solved, leading to the widening of the gap between long-term and short-term inventory, the brand factory may carry out inventory adjustment of components between the second quarter and the third quarter of 2021.

Exploit breakthrough opportunities

In 2020, Huawei briefly reached the number one sales position in the world, but the changes in the external environment undoubtedly affected its subsequent development rhythm. The glory of the split is a manifestation.

Tang Ding analyzed to the reporter that Huawei/Glory smartphones are expected to be in short supply in the first half of 2021, so Android manufacturers such as OPPO, vivo and Xiaomi are expected to seize part of Huawei/Glory's share in the global market.

"However, the difficulty in taking over Huawei is mainly due to the rapid expansion of domestic offline distribution channels and overseas operator channels." She continued, because Huawei has the most comprehensive channel coverage in domestic low-line cities and rural markets, consumers in low-line cities are also the most recognized Huawei/Glory brand, and it is difficult for other brands to quickly cover and occupy the vacancy of Huawei/Glory products in a short time, It is also difficult to establish the reputation of Huawei as a "national brand" among consumers in the short term.

She further believes that the short-term vacancies of Huawei/Glory are ZTE TCL、 Meizu, Xiaochili, China Mobile and other smaller mobile phone brands also created opportunities. "Especially in domestic low-end cities and rural markets, but these brands also have to compete with large-scale OVM. Opportunities exist, depending on the layout and execution of each manufacturer."

Canalys analyst Jia Mo has a similar view. He told reporters that based on theoretical estimates, if Glory's development is not hindered by the external environment, and even can use the GMS system overseas, Huawei will have more limited space for other brands. If not, the space will be very considerable.

"At present, it is worth noting whether small and medium-sized brands such as ZTE, Yijia and Realme will have the opportunity to further gain market share in China in 2021. If they can succeed in products, channels and market, they will have great strategic opportunities in China," he said.

The attitude of mobile phone manufacturers this year more or less shows the direction they hope to break through, but of course it is not all strongly related to Huawei's changes.

On January 4, Chen Mingyong, the founder and CEO of OPPO, said in his New Year's speech that OPPO would further push into the high-end market this year.

"In particular, 2021 is the tenth anniversary of our high-end flagship, the Find series. The Find X3 released in the first quarter will be the" first work "of OPPO brand's strong breakthrough, and also our" ideal work for a decade. "According to Chen Mingyong, in the handheld brand highland of Western Europe and Japan, OPPO's shipment volume in 2020 has reached 3.4 times and 2.8 times of that in 2019, which is one of the performances that OPPO is working hard.

Liu Zuohu, the founder and CEO of Yijia, also said recently that Yijia will be the first in the domestic high-end market in the next time.

At the launch of realme V15 new products held on January 7, Xu Qize, vice president of the company and president of China, pointed out that the strategy of "5G popularization" will continue to be implemented this year. "In the new year, we will continue to be committed to the sinking of 5G prices and in-depth cooperation with operators' policies. Let 5G mobile phones reach more people."

He further said that realme would also enrich its product lines. In addition to the Q series, V series and X series already released, the new series code named Race would be launched; It will also further enrich the range of AIoT products. "This year, China will become the next ten million level sales market of realme."

Xu Qi pointed out to the 21st Century Economic Reporter that although the competition in the Chinese market is very fierce, there are still opportunities. One core is 5G.

"Because China is expected to usher in a more large-scale replacement wave in 2021, realme can see the market is growing slowly by observing the market feedback after the sinking of RMB 1000 5G." At the same time, he pointed out that the Chinese market is not completely crowded, and the key is to see the products.

"In the process of switching from 4G to 5G in 2020, we can see that the replacement speed of 5G is very fast in the price range above 2000 yuan. Our discussions with channel partners suggest that the wave of switching from 5G in China's market in 2021 will directly reach the level of 1000 yuan." He continued.

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