With key regions getting a better control of the coronavirus pandemic, the smartphone market worldwide is surging. A smartphone industry analysis by Canalys revealed that 347 million smartphones were shipped in the first quarter of 2021. This was a 27% increase compared to the same period last year.
Besides Apple ranked second, the top 5 ranks are dominated by Asian players, namely South Korea’s Samsung as biggest seller in Q1 2021, followed by the Chinese competitors Xiaomi (3), Oppo (4) and Vivo (5). Huawei, former world number one, remains shackled by US sanctions. The Chinese technology giant sold its smartphone brand Honor in 2020 and is now in seventh place.
According to the Canalys study, other players are advancing their positions and can be a looming threat for industry giants, e.g. Honor, now independent from Huawei. “It has already struck supply chain deals and is now signing distribution agreements to re-enter several markets in the second half of 2021,” said Canalys Research Manager Ben Stanton.
Samsung keeping the upper hand
According to the smartphone industry analysis, Samsung as number one player in the industry, shipped more than 76 million units in Q1 2021. Compared to 59.6 million units in 2020’s first quarter, Samsung sales grew by 28%. This has helped the Asian giant maintain its market share at 22%.
Samsung’s early update release for the Galaxy S series helped steal the show from non-Asian giants like Apple and bring focus to its latest A-Series products. In October of 2020, the South Korean multinational conglomerate decided to close down its last smartphone factory in China. The decision was effectively a statement by the company to outsource more than 25% of its production to Chinese contractors. Samsung’s purpose is to lower its price range to compete with lower-end rivals like Xiaomi.
The decision caused alarm among experts, who warned that the move might undermine Samsung’s quality control, losing its most significant edge. The widespread concern stems from the Galaxy Note 7’s scandal in 2016 (catching fire), highlighting the fact that Samsung cannot afford another similar scandal.
A giant leap for Xiaomi
With all the Covid-19 chaos in the world, Xiaomi managed to turn the calamity into a blessing. In the first quarter of 2021, the Chinese multinational electronics company shipped 49 million units, resulting in 14% market share.
The Smartphone industry analysis demonstrates that Xiaomi’s numbers were up 62%, registering the sharpest growth spike in the global smartphone industry. This was in comparison to the 30.2 million units shipped in the first quarter of 2020.
In addition to the annual growth, Xiaomi continued to move up every quarter. With US sanctions leaving Huawei’s market position in jeopardy, experts believe Xiaomi can capitalize on the opportunity to increase its market size.
In addition to the best quarter in its history, the firm also celebrated the success of Xiaomi Mi Band 6. Lei Jun, the CEO of Xiaomi, recently posted a picture of the Mi Band 6 sales figures, revealing Xiaomi sold more than a million units of the fitness bracelet. The product had been on the smartphone market for less than a month.
“In addition to great product value, Xiaomi is now also making strides to recruit local talent, become more channel-friendly and lead in high-end innovation, as seen with the Mi 11 Ultra and its recent foldable, the Mi Mix Fold,” said Stanton. “Its competitors offer superior channel margin, but Xiaomi’s sheer volume actually gives distributors a better opportunity to make money than rival brands. But the race is not over. Oppo and Vivo are hot on its heels, and are positioning in the mid-range in many regions to box Xiaomi in at the low end.”
Oppo managed to ship 37.6 million units in the first quarter of 2021. This was a jump of 60% compared to exactly a year ago and a 11% share of the market. Similarly, Vivo upped its sales from 24.2 million units in Q1 2020 to 36 million units in Q1 2021. Thanks to the 48% growth in sales, Vivo now enjoys a 10% market share.
Changes in the smartphone industry
Huawei shipped 18.6 million units without the Honor brand, dragging the company down from the top of the table to the 7th spot. According to canalys this is on the backdrop of US sanctions putting a dent in Huawei’s sales. The Chinese tech giant, however, claims to have a specific plan for recapturing its former position in the smartphone market.
One big competitor is exiting the market. LG, the South Korean multinational electronics company announced it’s leaving the smartphone industry scene. After LG’s market share plunged, the former smartphone pioneer decided to close its smartphone division by the end of July. According to analyst, this will further open up opportunities for mid-size companies.
The future of the smartphone industry, however, bears uncertainties. “Supply of critical components, such as chipsets, has quickly become a major concern, and will hinder smartphone shipments in the coming quarters” Stanton said. “It will drive global brands to rethink regional strategies. And while the shortages persist, it will grant larger companies a unique advantage, as the global brands have more power to negotiate allocation. This will put further pressure on smaller brands and could force many to follow LG out of the door.”