According to the latest research from Counterpoint Market Monitor Q2 2018 (April-June), Global handset profits grew 4% annually in Q2 2018 mainly due to Chinese brands, which were aggressive with their flagship offerings. Their combined profits crossed US$ 2 billion for the first time, contributing to almost a fifth of the total handset profits. Chinese brands are planning on to entering new price tiers in the premium segment. Brands like OPPO, vivo and Huawei have tweaked their design language by adding new features, at a time when overall innovation within smartphones was already reaching its peak. Examples include the vivo Nex (Ultra Full View Display with in-display fingerprint), OPPO Find X (Ultra Full View Display) and Huawei’s P20 Pro (Triple camera). We expect the average selling price of smartphones will further increase, driven by developed markets. However, smartphone volumes are likely to be flat as consumers are now keeping smartphones for longer. This will have implications for OEMs’ revenue as OEMs are looking to maximize their profits by increasing their average selling price and entering new price tiers. Only vertical integrated companies, in such a scenario, are well poised to capture the trends. Apple remains the most profitable smartphone brand. iPhone X, which drove a new design language, helped Apple command a significantly higher Average Selling Price (ASP) during the second quarter, at a point when the overall smartphone market was beginning to saturate.

Market Summary – Q2 2018

Global handset profit grew 4% annually, capturing 11% of the total handset industry revenue in Q2 2018.
Apple was the most profitable brand in Q2 2018 with 62% market share followed by Samsung 17% and Chinese brands: Huawei (8%), OPPO (5%), vivo (4%) and Xiaomi (3%) were the key Chinese players which grew during the quarter.
The remaining 1% of total industry profit was distributed among more than 600+ handset brands.
Samsung’s profit declined 21% annually due to weaker than expected sales of the Galaxy S9 series. The Galaxy S9 series shipments declined 24% in Q2 2018 as compared to Galaxy S8 series in Q2 2017.
Xiaomi (747%), Huawei (107%), vivo (24%) and OPPO (23%) were the fastest growing smartphone brands in terms of handset profits during Q2 2018.
Chinese brands crossed the US$ 2 billion mark for the first time. Chinese brands kept on introducing flagships with cutting-edge features and futuristic designs throughout the year. These are driving sales and increasing profit margins for them.

The comprehensive and in-depth Q2 2018 handset profit share analysis is available for subscribing clients. The methodology involves insights from supply chain interviews and our Bill of Materials (BOM) tracker. Feel free to reach out to us at press@counterpointresearch.com for further questions regarding our in-depth latest research, insights or press enquiries.

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