Weak Spending, Component Shortages Drag Down China Smartphone Sales in Q3 2021

Article By : Counterpoint Technology Market Research

Due to weak consumer demand and component shortages, especially 4G SoCs, China's smartphone market failed to see any major improvement in sales in Q3 2021.

China’s smartphone sales in the third quarter of 2021 declined by 9% year-on-year but increased by 3% quarter-on-quarter to reach 76.5 million units, according to Counterpoint Research’s Monthly Market Pulse Service. Due to weak consumer demand and component shortages, especially 4G SoCs, the country’s smartphone market failed to see any major improvement in sales in Q3 2021.

Commenting on the overall Chinese smartphone market, Research Analyst Mengmeng Zhang said, “Although COVID-19 has been well contained in China due to its zero-tolerance approach, its economy has not come out unscathed, growing just 4.9% YoY in Q3 2021, compared to 7.9% YoY in Q2 2021. The country’s services sector also slowed sharply in August while showing a slight rebound in September. In the meantime, China’s smartphone market remained stagnant with demand mainly coming from replacement needs. Lack of new smartphone features also kept many consumers away.”

Commenting on key vendors’ performances, Senior Research Analyst Ethan Qi said, “The overall smartphone market experienced further reshuffling in Q3 2021, factoring in HONOR’s comeback. vivo and OPPO continued to lead the market with 23% and 20% shares, respectively. HONOR’s share rose quickly to the third spot, marginally surpassing that of Xiaomi. Xiaomi’s position is expected to be challenged the most by HONOR as both OEMs have a higher sales contribution from online channels when compared to other major Chinese OEMs. Apple’s ranking stayed unchanged in Q3 2021, but it is expected to rise in Q4 2021 with the debut of the iPhone 13 series.”

Discussing the 5G smartphone segment in China, Senior Research Analyst Ivan Lam said, “5G smartphones have become the mainstream offering in the country with the Chinese OEMs bringing down the price threshold for these devices to low-to-mid price range. 5G smartphone sales accounted for 79% of total smartphone sales in Q3 2021. Among the Top 10 best-selling models in Q3 2021, only the HONOR 20 and Redmi 9A were 4G-enabled while the rest were all 5G.”

Smartphone Sales Volume Share of Key OEMs in China

Smartphone Sales Volume Share of Key OEMs in China
Source: Counterpoint Monthly Smartphone Market Pulse

HONOR was the fastest growing brand in Q3 2021, outperforming the market with 96% QoQ growth in sales volume. HONOR has made a strong comeback since June and its market share has almost doubled from 7.7% in Q2 2021 to 14.7% in Q3 2021. With over 30 distributors and retailers being HONOR’s investors, it has managed to quickly restore sales across both offline and online channels. Despite having a lean portfolio, both its 5G-enabled mid- to high-end HONOR 50 series and 4G-enabled HONOR 20 quickly became top sellers. The launch of the Magic 3 flagship will further enrich HONOR’s product portfolio, but it will not be the major sales contributor.

Sales of market leaders vivo and OPPO grew 21% YoY and 26% YoY, respectively. Sales of vivo were mainly driven by the vivo S10/S10 Pro, Y31s and Y52s, while sales of OPPO were mainly driven by the OPPO Reno 6, OPPO A55 and OPPO A93. The market leaders’ best-selling models are still predominantly concentrated in the sub-$500 price band. Tackling the high-end price range after the downfall of Huawei remains a challenge for Chinese OEMs.

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