Today, Chen Jin, general manager of China Mobile Phone Business Department of Lenovo, said that now and in the future, all players in the Android mobile phone camp are facing three major pressures. According to him, the pressures are
- Growth pressure due to continued market decline.
- Cost pressure due to exchange rate uncertainty in the Chinese market.
- Pricing pressure due to rising cost of chips.
Chen Jin pointed out that all manufacturers in the Android camp are facing these three major pressures. However, this is reflected more on some brands than others. This is because these companies’ response to the situation is different. Companies with a very positive response will not have to deal with the situation under “pressure”.
Previous reports point out that chip foundries such as Samsung Electronics and TSMC are currently facing tremendous cost pressures. From chemicals, natural gas, to wafer equipment materials, the average cost of production for chipmakers is currently increasing by 20-30%.
To that end, Samsung Electronics is negotiating with foundry customers and plans to increase semiconductor production rates by 20% this year to meet rising material and logistics costs. This marks a major shift in Samsung policy and could increase cost pressures on the downstream demand side of chips such as smartphones and automobiles.
On the other hand, the smartphone industry is facing declining shipments. According to report data from Strategy Analytics, the Chinese smartphone market will ship 71.9 million units in the first quarter of 2022. This is a 17% year-on-year decline. Strategy Analytics also believes that under the negative impact of the epidemic, there will be some decline. China’s smartphone market size will shrink 5-6% year-on-year in 2022.
Android smartphone market
According to IDC, users were reluctant to buy mobile devices and sales fell 8.9% compared to the same period last year. Results of the first three months of this year, 314.1 million units were delivered to the market. While from January to March last year, this figure was 344.7 million units. Among the reasons for the decline, analysts cite logistical issues; a shortage of components and an unstable economic and geopolitical situation. Predictably, demand for smartphones has fallen the most in Central and Eastern Europe…
“Although some decline was expected in the first quarter, due to ongoing supply and logistics issues and a difficult year-over-year comparison, things appeared to have gotten worse,” Nabila said. Popal, research director at IDC. “Consumer sentiment in all regions, and particularly in China, is broadly negative with strong concerns over inflation and economic instability which have dampened consumer spending. components and transport and the recent blockades in Shanghai which are aggravating an already difficult situation. On top of all this is the Russian invasion of Ukraine which immediately affected this region and continues on an unknown trajectory. given all these uncertainties, most OEMs are adopting a more conservative growth strategy for 2022.”