Huawei Reclaims Top Spot!

On February 4th, the market research firm Counterpoint released data indicating Huawei regained the top spot in smartphone sales in the Chinese market during the first two weeks of 2024.

Huawei Reclaims Its Spot in the Top Five

Counterpoint analysis points out that the success of the Mate60 series has been a key driver for Huawei’s recent success. Moreover, the strong brand loyalty and the successful launch of HarmonyOS have also contributed to the surge in sales.

Source: Counterpoint Official Weibo

Currently, several models of the Huawei Mate60 series remain in high demand, with consumers reporting difficulty in obtaining the devices. One consumer mentioned having ordered a Mate60 a month prior at a Huawei authorized store in Shenzhen and is still waiting for delivery.

According to a Canalys report, the decline in China’s smartphone market narrowed further in the fourth quarter of 2023, with total shipments amounting to 73.9 million units, a 1% year-over-year decrease. During this period, Huawei shipped 10.4 million smartphones. Its flagship models led to a 47% year-over-year increase, bringing Huawei back into the top five, ranking fourth.

Canalys analyst Zhong XiaoLei stated that Huawei became the biggest dark horse of the fourth quarter of 2023, re-entering the top five in shipments in the Chinese market after 10 quarters. The Mate60 Pro is considered the flagship model driving Huawei’s shipping resurgence. Zhong believes that enthusiasm in the Chinese market for Huawei’s new products reflects domestic consumers’ demand for software and hardware innovation.

Domestic Smartphones Charge into the High-End Market

On January 31st, TF International Securities analyst Ming-Chi Kuo released a new research report suggesting that Apple had reduced key semiconductor component orders, with forecasted iPhone shipments dropping to about 200 million units in 2024, a 15% decrease from the previous year. Among major smartphone brands globally, Apple might experience the greatest decline, particularly marked in the Chinese market. This trend is underscored by the renewed vigor and rising dominance of domestic brands like Huawei, Xiaomi, and Vivo in the high-end smartphone segment.

Wang Liansheng, a consultant with the Shanghai Computer Industry Association, noted that domestic brands like Huawei have launched innovative products such as folding screen phones, full-screen phones, and AI phones, receiving a positive market response. This has allowed them to gradually ascend in the high-end market segment. AI intelligence, folding screens, and international markets are expected to become keywords for the Chinese smartphone industry’s shift towards high-end development in 2024.

A mobile phone market report by Zhuanzhuan Group indicates that, in the fourth quarter of 2023, Huawei and Xiaomi models dominated the top ten in the second-hand smartphone popularity rankings. Meanwhile, the title of the best-valued smartphone was claimed by the Huawei Mate X5.

Guo Tao, deputy director of China Electronic Commerce Expert Service Center and a senior artificial intelligence expert, said, “With the hot sales of new products by Huawei, Xiaomi, Vivo and other brands in the high-end market, their engagement with AI, and their accelerated push into international markets, industry chains such as high-end semiconductors and displays will embrace development opportunities. Currently, smartphone manufacturers are building a new generation of smart ecosystems encompassing devices, models, automobiles, and internet terminals. By upgrading phones towards intelligent human-machine interaction, they are adding weight to their competition in the high-end market.”

The Rise of Domestic Smartphones

The first week of the new year saw Huawei phones achieving the highest sales volume in the Chinese market. On January 8th, OPPO’s flagship model surpassed 1 million reservations in just 5 minutes; and on January 18th, the Honor Magic6 series sold a record 666 million RMB within 2 minutes and 35 seconds of being available on all e-commerce platforms. How have domestic smartphones started the year on such a strong note?

Mastery of core technology, concentrating on “chips” and “soul”, gives domestic smartphones ample confidence. The lack of chips and operating systems, the “soul” of the devices, was once a sore point for China’s information industry. The weaknesses in the smartphone industry were chips and operating systems. In recent years, many domestic smartphone brands have made continuous efforts in chips and operating systems, with products like the Kirin chip and HarmonyOS becoming increasingly mature, now reaping the benefits.

At the end of last August, the Huawei Mate 60 series, which combined “chip and soul,” made a strong comeback, sparking a consumer frenzy for the sought-after device. Against the backdrop of a global smartphone market slump, China’s smartphone market has notably revived. The China Academy of Information and Communications Technology announced that in November 2023, domestic brand phone shipments reached 25.442 million units, a year-over-year increase of 26.5%, accounting for 81.5% of the period’s total phone shipments. The “engine” force of domestic smartphones in the market is undeniably linked to the confidence built on “chip and soul.”

Keeping close to the market and leading trends, domestic smartphones have stimulated consumer demand. Over the past few years, the rate of smartphone replacement globally has been declining. Economic downturns have weakened consumer demand, and a lack of smartphone innovation has made it difficult to motivate users to upgrade. Domestic smartphones, on one hand, continuously push the envelope with image functions, battery life, and system experience, offering high-value products; on the other hand, with creative innovations, they actively stimulate consumers’ desire to upgrade, rightfully earning their status as proactive market trendsetters.

For example, after Huawei introduced the “satellite call” feature last August, other domestic smartphone manufacturers quickly followed suit. In the past year, artificial intelligence large models have been a hot topic, and smartphone manufacturers are also rolling out new technologies like big models, potentially bringing significant functional improvements to domestic smartphones.

By refining internal capabilities for their weaknesses and humbling themselves to meet consumer needs, the popularity of domestic smartphones is a natural result. The fourth quarter of 2023 saw a warm-up in the global smartphone market, ending a consecutive seven-quarter downturn. This year’s market is also off to a good start, with consumer demand expected to continue growing. It’s anticipated that the major domestic smartphone brands will seize this opportunity to get ahead in the next round of international competition.

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Li Qiang signs a State Council order.

Source: WeChat, synthesis of Economic Daily (author She Huimin), China Securities Journal, Securities Daily

Supervised by: Zhang Yiyong

Reviewed by: Peng Jinmei

Edited by: Zhang Meng

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