Smartphone production to remain flat in Q4

The total smartphone volume for the third quarter of 2018 grew by 8% from the second quarter to around 380 million.

This is according to market research firm TrendForce, in its latest report on global smartphone production.

TrendForce says the growth was attributed to a gradual recovery of demand in 2Q18 and the stock-up of inventories related to releases of new devices and holiday sales events.

The market research firm points out that although the latest products from Apple and Huawei continue to generate demand in the smartphone market, sales of the new iPhone XR/XS/XS Max turned out to fall short of expectation, resulting in lower shipments of iPhones.

It estimates the total production volume for 4Q18 will be roughly similar to that of 3Q18, coming to around 380 million units.

The general development of the smartphone market has reached the mature stage, and smartphone brands are struggling to differentiate their new products, many of which lack breakthrough features to stimulate purchases, says TrendForce. It adds that as a result, consumers are less active than before with respect to replacing their existing devices.

Many smartphone makers have to work harder to highlight their brand values in the midst of fierce competition, the market analyst firm says.

It points out that some smartphone makers are committing more resources to developing their high-end models, while others are raising hardware specifications to show they are offering greater value and better performance for the cost. Nevertheless, these efforts also put the squeeze on their profit margins.

According to TrendForce, there are other variables that will make the maintenance of profitability very challenging. In addition to the fluctuations in exchange rates and rising costs of components, it notes, the uncertainties produced by the ongoing US-China trade dispute are going to impact their operation.

At the same time, major smartphone brands will continue to enlarge their market share at the expense of the smaller brands.

Apple will compete with Samsung for the top position in the production volume ranking for 4Q18, says TrendForce.

Among the world's top six smartphone brands by production volume, Samsung again topped the ranking in 3Q18 with a quarterly total of 74.5 million units, which amounted to a market share of almost 20%.

The strong channel demand for its latest devices caused Huawei's total smartphone production volume in 3Q18 to surge by 44% year-on-year to a new high of 55.5 million units. Huawei is currently the world's second largest smartphone brand, surpassing Apple in volume for two consecutive quarters, says TrendForce.

It adds that Huawei's in-house research and development capabilities and extensive product lines across all market segments have benefitted its expansion in overseas markets during recent years.

It points out that Apple was behind Huawei for the second consecutive quarter as the world's third largest brand in 3Q18, with its iPhone production volume for the period totalling 47.1 million units.