TAIPEI – Global smartphone sales will gradually recover in 2021 and will likely see a relatively strong wave of device replacement demand, as well as demand growth in the emerging markets, new market research says. Assuming these conditions materialize, says TrendForce, the report author, the annual global smartphone production for 2021 is forecasted to increase 9% to 1.36 billion units.
Huawei will experience a further and significant decline in its device production, the firm says, because of the effects of the US export restrictions and the spinoff of Honor as a separate entity operating in the smartphone market. Huawei is currently projected to tumble from third place in 2020 to seventh place in 2021.
The top six for 2021, in order, will be Samsung, Apple, Xiaomi, OPPO, Vivo, and Transsion. Together, they will account for almost 80% of the global smartphone market. Nevertheless, the pandemic will remain the central variable (or the biggest uncertainty) in the production projection because it will continue to exert significant influence on the global economy. Besides the pandemic, the performance of smartphone brands during 2021 could also be affected by geopolitical instabilities and the lack of available production capacity in the semiconductor foundry market.
In 2020, global smartphone production was 1.25 billion units, a record-breaking 11% year-over-year decrease. The top six smartphone brands ranked by production volume for 2020, in order, were Samsung, Apple, Huawei, Xiaomi, OPPO, and Vivo.
Penetration rate of 5G smartphones is likely to rise to 37% in 2021, while production will still be constrained by limited foundry capacities.
Thanks to the Chinese government’s aggressive push for 5G commercialization in 2020, global 5G smartphone production for the year reached about 240 million units, a 19% penetration rate, with Chinese brands accounting for almost a 60% market share. While 5G will remain a major topic in the smartphone market this year, various countries will also resume their 5G infrastructure build-out, and mobile processor manufacturers will continue to release entry-level and midrange 5G chips. As such, the penetration rate of 5G smartphones is expected to undergo a rapid increase to 37% in 2021, for a yearly production of about 500 million units.
Under the optimistic assumption the pandemic can be resolved within the year, shipments for various end-products, including servers, smartphones, and notebook computers, will undergo a year-over-year increase compared to 2020. Case in point, the number of PMICs and CIS (CMOS image sensors) contained per handset will each double to meet increased smartphone specifications. On the other hand, Chinese foundry SMIC has recently been added to the Entity List once again. This is expected to exacerbate the foundry industry’s already-strained production capacity.
Smartphone brands’ recent bullish outlook toward the 2021 market and their attempt to secure more semiconductor supplies by increasing their smartphone production targets can potentially lead these brands to overbook certain components at foundries, says TrendForce. However, smartphone brands may adjust their component inventories from the second to third quarter and reduce semiconductor procurement activities if actual sales performances fall short of expectations, or if component bottlenecks remain unresolved, leading to a widening inventory gap between bottlenecked and non-bottlenecked parts. Even so, TrendForce still forecasts an above-90% capacity utilization rate for foundries in 2021.