Why are China, the United States and South Korea the only three countries left competing in the smartphone market?

Recently, the statistics agency released the ranking of global smartphone shipments in the third quarter of 2021, which are: Samsung 21%; Apple 15%; Xiaomi 14%; OPPO 11%; vivo 11%; others 28%. Huawei has quickly fallen from the second place in the world last year to the "others" category due to the dual impact of chip supply cuts and the separation of Honor.

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Meanwhile, although Samsung and Xiaomi ranked high, they both experienced a 10% drop in market share. OPPO, vivo, and Apple all saw double-digit increases in market share thanks to the performance of their new models and sub-brands.

But what’s more interesting is that the top five brands on the list have a combined market share of over 70%. Why are there only three countries left competing in the global smartphone market: China, the United States, and South Korea?

America's Thirty Years of First-Mover Advantage

The rise of the US technology industry can be traced back to the US-Soviet space race that began in the 1950s. The US lagged behind the Soviet Union in the early stages of the race, as the Soviet Union was the first to achieve artificial satellites, manned spaceflight, spacewalks, and space stations. Therefore, the US decided to overtake the Soviet Union and realize the manned moon landing plan.

Hundreds of American companies and research institutes participated in the moon landing project, creating many modern products, including the semiconductor industry. HP, IBM, and Intel were born one after another, mastering the latest semiconductor technology, and giving birth to digital consumer product manufacturers such as Apple.

The United States was the first to master the semiconductor industry, far ahead of other countries, and naturally established a first-mover advantage. Personal computers, mobile phones, smartphones, wearable devices, and many of today's Internet models were first born in the United States.

Therefore, it is not surprising that Apple, as the most valuable technology company in the United States, has always been at the forefront of the market. And this advantage will continue to exist when developing countries such as China have not yet fully mastered the semiconductor industry.

A chance encounter in Korea

After the Korean War, South Korea was taken over by the United Nations forces led by the United States and was called the Republic of Korea, which was protected by the US Seventh Pacific Fleet.

Due to its strategic location, the United States did not think about vigorously developing the Korean economy in the early days, but only did some traditional industrial and agricultural commodity economy. In fact, from the 1950s to the 1980s, the living standards of the Korean people were not as good as those of North Korea, which was funded by the Soviet Union. However, the turning point lies in neighboring Japan.

After World War II, Japan, with the help of the United States, vigorously developed its industry and technology, achieved rapid economic development, and became the first developed country in Asia. In the later period, Japan, which was developing rapidly, dared to use the yen to challenge the dollar in the national market. It was sanctioned by the United States, which triggered a financial tsunami and it has never recovered since then.

The United States then turned to support South Korea, and Samsung seized this opportunity and transformed from a traditional industrial enterprise into a technology company. Since the 1990s, Samsung has become the world's largest supplier of AMOLED screens and solid-state memory chips, and the second largest lens sensor and chip foundry. Its revenue once accounted for a quarter of South Korea's GDP.

With such technology and industry chain strength, Samsung mobile phones have always been at the forefront of technology. No matter how other manufacturers promote, Samsung's annual Galaxy S and Note series are the real Android flagship benchmarks. This strength allows Samsung to be the world's number one even if it loses the Chinese market.

China's World Factory Bonus

Compared with the United States and South Korea, China developed the latest, but also the fastest. The core is reform and opening up, which made China the world's factory. The deeper meaning behind it is that China has mastered modern manufacturing. No matter what product, it is only a matter of time for China to manufacture it.

In the early days, China manufactured mobile phones for Nokia, Motorola, Apple and other companies, which indirectly cultivated the supply chain level of related industries in China, which led to the rise of companies such as Xiaomi, OPPO and vivo. If there were no technology accumulated by the world's factory, such as India, would Xiaomi be able to make a 1,999 yuan smartphone?

At the same time, because China started its development directly from the mobile Internet and has a vast market of 1.4 billion people, Chinese mobile phone manufacturers can rely on the domestic market to grow and then consider competing overseas. Even if they lose the entire overseas market, they can still support mobile phone companies such as Xiaomi and OV with their huge domestic market.

However, the disadvantage of this model is that it is easy to be sanctioned if it is only an assembly plant without mastering the core technology. Even if Huawei has its own chip design technology, it will be helpless if the foundry is cut off from supply.

Manufacturers such as Xiaomi and OV are determined to enter the high-end market, but due to technical limitations, they are unable to make machines that are on par with Apple and Samsung, and they also have to always think about being the first to launch Qualcomm chips.

What about other countries and regions? Japan has Sony, but the system experience is not good; Europe once had Nokia, but failed to seize the opportunity of transformation and mistakenly got involved with Microsoft. And regions such as Southeast Asia, the Middle East, and Africa simply do not have an industrial chain that can support smartphone manufacturing.

Smartphones have already reached the final round, who do you think will be eliminated further?