Smartphone sales around the world will remain weak in 2018 due to lower demand and fewer replacement purchases, according to a report by market analyst TrendForce.
Due to a continuous rise in the costs of upstream components, downstream mobile phone vendors have to reconsider the pricing or adjust the specification of end-products to cope with the cost pressures, the report said. This means the distribution of market share among the major players is expected to remain generally the same as last year.
TrendForce, therefore, estimates the global smartphone production for 2018 at around 1.5 billion units, a 2.8% annual growth only, down from previously expected 5%.
"Looking back to global smartphone market in 2017, the sales in [the first half] were weaker than expected since the demand was affected by the anticipated launch of new iPhones in [the second half of 2017]," the report stated.
"In the second half of the year, major smartphone brands put focus on all-screen models, hoping to boost the replacement purchases at the year end, but the sales turned out to be lower than expected. Therefore, since the mid [fourth quarter], smartphone vendors have lowered their quarterly production plans due to the huge cost pressures brought by excessive inventory."
According to TrendForce, the handset manufacturers with the biggest potential for the future are Apple and Nokia, and were quoted as "the only international brands with a clear future of growth in 2018".
As the industry leader, the analysts said Samsung will remain the top for smartphone production this year and is expected to continue the success of its budget smartphones, the Galaxy A and J series.
"The smartphone production volume of Samsung is estimated at 300 million units in 2018, a decrease of 5% year on year," said the report.
Despite IDC's latest report stating that Apple overtook Samsung in the smartphone sales for the last quarter of 2017, TrendForce believes Apple will "remain in second place in the ranking of smartphone production for 2017".
For this year, Apple is set to launch three new flagship models in the third quarter, expanding the adoption of Face ID and all-screen technology in these new iPhones, along with upgrading their existing functions and increasing the memory content as well.
As a result, TrendForce said iPhone's annual production volume will increase by 6% because of improved specifications of new iPhones and Apple's expansion in the Indian market.
As for LG, who previously announced its withdrawal from the Chinese market, TrendForce's report stated that the Korean tech giant is an example of how international brands are finding it harder to survive in the Chinese market, where there is growing support for domestic brands.
"More importantly, international brands have difficulty to stay profitable in China because the offerings of the domestic brands have higher performance-price ratios," the analysts added.
