Smartphone segment may rebound in Q2

China's smartphone industry is likely to pick up in the second quarter of next year as domestic demand gradually recovers and companies scramble to adjust their strategies to attract consumers, experts said.

Their comments come as market research company Counterpoint Research expects the global smartphone market to see 2 percent year-on-year growth in 2023.

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said that amid the broader background of China's efforts to boost consumption and the optimization of COVID-19 prevention measures, consumer demand for electronics such as smartphones will gradually recover.

Zhang Qi, an analyst at Counterpoint Research, said: "Looking at the overall smartphone market, we believe that it is possible to achieve positive growth in the second quarter of next year, which is mainly supported by the macro-economy. The current problem facing smartphones is not from the supply side, but from the demand side."

Smartphone shipments in China fell 11.9 percent year-on-year to 71.13 million units in the third quarter of 2022, according to market research firm International Data Corp. But the decline was narrower than the previous two quarters.

Zhao Ming, CEO of Chinese tech company Honor Device Co Ltd, said that although this year was very tough for all smartphone vendors, the company is cautiously optimistic about next year's prospects.

"There have always been ups and downs in the industry, and everyone is actively making adjustments. Honor will maintain growth in the Chinese market over the next few years, and the momentum in overseas markets will be particularly strong," Zhao said.

Guo Tianxiang, an analyst at International Data Corp, said smartphone brands need to adopt a more pragmatic and prudent strategy. While reasonably and effectively controlling inventory levels, they should still maintain, or even increase, their investment in product research and development.

Whether from the hardware or software level, they should strive to create distinctive and differentiated products to stimulate more consumer desire to buy new phones, Guo said.

That is what Chinese smartphone vendors are doing. Oppo and Vivo, for instance, are beefing up their R&D push to develop self-designed chips, and Honor and Xiaomi are also ratcheting up resources to expand their presence in the high-end segments.

Peter Richardson, vice-president at Counterpoint Research, said smartphone vendors focusing on the premium segment, which is more resilient than the low-end to mid-range segments, are better positioned to deal with risks, with deep technological expertise and diversified businesses capable of weathering challenges.

Counterpoint Research forecast that the global smartphone market is expected to start to grow from the third quarter of 2023. And from 2024, the global market for 5G devices is expected to show healthy growth as efforts to spread low and mid-priced 5G devices continue.

Pete Lau, chief product officer of Chinese smartphone vendor Oppo, said online sales of smartphones in China have been quite stable for several years at around 100 million units, and the online proportion will be increasingly higher in the future, promising big potential.

Lau said Oppo will invest 10 billion yuan ($1.43 billion) into its sub-brand OnePlus over the next three years, and provide support in technology, channels and services, so as to cultivate OnePlus into the No 1 smartphone brand purchased online for the above-2,000 yuan price segment.