Chinese mobile handset makers in 2012 are set to nearly double their shipments of smartphones to more than 100 million units, spurred by factors including the growing interest among the local populace, improved telecommunications infrastructure and increased affordability of the devices, according to an IHS iSuppli China Research topical report from information and analysis provider IHS.
Smartphone shipments from Chinese handset suppliers in 2012 are projected to reach 101.4 million units, up a phenomenal 94 percent from 52.2 million units this year, and nearly 10 times higher than the 2009 level of just 10.2 million units. And while growth levels will begin to moderate starting next year, expansion will remain in the double-digit range until at least 2015, when shipments total 188.4 million units. The majority of smartphone shipments today go into China’s domestic sector for use within the country. However, this will change in the future, with 50 percent of the smartphones produced in 2015 destined for the export market.
To be sure, smartphones today remain in the minority in China, outnumbered by lower-end handsets known as feature phones, as well as by ultra-low-cost handsets (ULCH) that usually serve as entry-level devices. Compared to the more than 100 million smartphones set to ship in China next year, there will be 535 million feature phones and 175 million ULCH devices. However, feature phones will see a marked decline in their numbers in the years to come, while ULCH devices will not nearly match the rapid growth taking place in the smartphone segment.
The smartphone market in China owes its dynamic growth to many factors, but interest was sparked by the splashy headlines made at the outset by Apple Inc.’s iPhone and the Galaxy S II from Samsung Electronics Co. Ltd. While Chinese consumers used to purchase an iPhone or Galaxy S II to serve as a status symbol, an increasing portion of the populace has gravitated toward smartphones since then because of features like large touch screens, high-quality photo capture and the availability of popular applications, IHS iSuppli research has found.
Meanwhile, both the scope and quality of coverage of China’s wireless 3G networks have improved, with base stations deployed by the country’s three main carriers rising in number in order to sustain the expansion. All three carriers—China Mobile, China Telecom and China Unicom—have begun to focus their efforts on subsidizing 3G smartphone prices to attract high-end users.
Increased affordability also will help smartphone growth in the country. Chinese handset manufacturers have started introducing 3G smartphones costing less than 1,000 renminbi—or about $157, down from a price of 2,000 renminbi a year ago, and now made available by the carriers with a two-year contract.
Huawei Technologies Co. Ltd. and ZTE Corp. are China’s biggest smartphone manufacturers. The two companies, which already rank among the world’s Top 10 smartphone suppliers, are set to ship a combined 60 million smartphones in 2012. Other Chinese smartphone manufacturers include TCL/ Alcatel, Lenovo, Yulong Coolpad, Beijing Tianyu Communication Equipment Co. Ltd., and Goinee Communication Equipment Co.; as well as Internet companies like Xiaomi Tech Co. and the Alibaba Group, which also have entered the China smartphone space with their own branded products.
Both Huawei and ZTE compete with Samsung of South Korea as well as Finland’s Nokia Corp., which remains the largest overall smartphone supplier to the domestic Chinese market.
The most popular local smartphones in China are those that cost less than 1000 renminbi, including the V880 from ZTE, the U8650 from Huawei and the A60 from Lenovo.
Learn More > Chinese OEMs Aim to Ship 100 Million Smartphones in 2012