In the third quarter, the Chinese mobile phone market changed from "one superpower and many strong players" to "many strong players competing for supremacy".

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Data from research institutions show that global smartphone shipments in the third quarter were 327.3 million units, a year-on-year decrease of 10.8%. China's smartphone market shipments in the third quarter were approximately 80.8 million units, a year-on-year decrease of 4.7%.

It can be seen that the shipments of mobile phones in the global and Chinese markets showed a downward trend in the third quarter, and supply restrictions were the main factor leading to the decline in shipments. On the one hand, there was a shortage of components, and on the other hand, there was interference from production and logistics. Strategy Analytics expects supply restrictions to continue until the first half of 2022. For the Chinese market alone, the continued increase in the average unit price of mobile phones and the lack of product innovation to stimulate consumers to shorten the replacement cycle are the main factors for the continued decline in the market. The lower-than-expected terminal demand led to a decline in shipments in the domestic mobile phone market.

"As for the downward trend in the mobile phone market, from a supply perspective, upstream factors such as wafers, substrates, and logistics and transportation are still supply bottlenecks. In some cases, the delivery cycle is twice as long as usual. From the perspective of mobile phone components, some popular chip platforms such as Dimensity 700, power ICs, and LCD driver chips are in very short supply." said Wang Xi, research manager at IDC China.

The evolution of the mobile phone market has led to a fierce competition among the top players

In the Chinese mainland market, IDC data shows that vivo ranks first in the market with shipments of 17.9 million units, and OPPO (including OnePlus) ranks second with shipments of 16 million units. Honor returned to the first echelon and entered the top three with 14 million units, with its market share rising to 17.3% in the third quarter. Xiaomi shipped 11 million units, and its domestic share declined slightly due to supply shortages, ranking fourth in the third quarter. Apple ranked fifth with shipments of 8.08 million units. The data shows that compared with the first half of the year, the share gap between the leading manufacturers continues to narrow.

"In the third quarter of 2021, the gap between the top five manufacturers continued to narrow, and the market structure changed from 'one superpower and many strong companies' to 'competition among many strong companies'," said Wang Xi.

Among the top five manufacturers, Xiaomi and Honor have attracted much attention, but the two are facing completely different situations. Honor's domestic ranking has jumped to third, while Xiaomi has suffered two consecutive defeats. In the global market, Apple has defeated Xiaomi and returned to second place. In the Chinese market, Xiaomi has been surpassed by Honor.

There are traces of Xiaomi's failure. Wu Yiwen, a senior analyst at Strategy Analytics, said that there are two reasons for Xiaomi's decline in ranking in the third quarter. First, Xiaomi encountered setbacks in component shortages, which directly affected its shipments. The shortage of component supply is a shadow over the entire smartphone industry. Against the backdrop of shortages, manufacturers' ability to control the supply chain is particularly important. In this regard, Xiaomi is weaker than Apple and Samsung. Apple has strong control and bargaining power over the supply chain, while Samsung itself has strong R&D and integration capabilities in key components. The second is the pressure from competitors. Apple has always been strong in the third and fourth quarters, and the release of Apple's iPhone 13 has put pressure on Xiaomi. Secondly, the rise of Honor in the Chinese market has also put a lot of pressure on Xiaomi. These two reasons will not change much in the fourth quarter, so it is unlikely that Xiaomi's ranking will rebound in the fourth quarter.

Regarding Honor's leap to third place and return to the first echelon, Wu Yiwen said that in the Chinese market, Honor's performance in the third quarter was very impressive, and there were several important driving factors behind it. First, Honor's chip problem was further alleviated in the third quarter; second, Honor released a number of new products in the third quarter, and its product portfolio fully covered the price range of 1,199 yuan to 7,999 yuan; third, the channel dealer is one of Honor's investors, and Honor has also received favorable support offline; finally, from a brand perspective, Honor is also an independent brand incubated by Huawei and has a certain brand foundation. If the supply chain can remain stable, Honor will continue its growth trend in China in the fourth quarter.

The share of emerging mobile phone markets such as Asia Pacific, the Middle East and Africa is gradually increasing

At present, the importance of channels is becoming increasingly prominent, and terminal manufacturers are also actively expanding channels. Wang Xi believes that in the context of product convergence but more intense competition, the market tests the terminal manufacturers' ability to control core channels. Channels, especially offline sales, focus on the coverage of offline consumers and long-term consumer relationship management, and this is what terminal manufacturers need to do with the help of offline partners. Therefore, no matter how the rankings change and who competes for offline channel resources, the most important point for terminal manufacturers is to let offline partners see sustainable development, clear and stable route planning, so as to generate continuous cooperation motivation, cooperation confidence and loyalty.

Regarding the trend of the global mobile phone market in the past two years, Wang Xi said that China is still the world's largest smartphone market, but the share of the international market, especially emerging markets such as Asia Pacific, Middle East and Africa, and Central and Eastern Europe, is gradually increasing. The domestic market is the most competitive, and the user base is more widely distributed. The experience of the Chinese market can be used in overseas markets, which will also have a positive guiding role for terminal manufacturers in their overseas expansion. Therefore, at the global level, manufacturers with wider global business coverage and more sustainability will have greater competitive advantages in the long-term global market.