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Insights Tag: Argentina growth

LATAM Smartphone Market Felt the Full Impact of COVID-19 in Q1 2020

Q1 2020 smartphone shipment in the LATAM market declined 20.8% YoY.

Xiaomi shipment grew more than 203%.

New Delhi, Hong Kong, Seoul, London, Beijing, San Diego, Buenos Aires – June 2nd, 2020

 

In the first quarter of 2020, the Latin American smartphone market declined 20.8% YoY and 30.1% from Q4 2019, according to the latest research from Counterpoint’s Market Monitor service. The first quarter in LATAM is typically slow due to the summer recess in the Southern hemisphere. But this year, it was also impacted by COVID-19. The drastic drop in the shipment of smartphones exposes the relatively low penetration of online sales in the region.

Commenting on the market’s development, Counterpoint Research Senior Analyst, Tina Lu, said: “As this year’s Chinese New Year took place before the end of January, and factories in China were scheduled to remain closed for part of February, many brands built enough inventory to last until March. So, despite the COVID-19 measures preventing factories from reopening, sales channels, in most LATAM countries, were not affected by the lack of supply. Brazil and Argentina were the only two countries that suffered due to component supply issues from China”.

Tina added: “From the consumer side, COVID-19 hit the region only during March, when most LATAM countries started to lockdown. The degree of lockdown varied among countries. Argentina, Colombia, Ecuador, and Peru had complete lockdowns for the first few weeks, with everything closed except food stores, groceries, pharmacies, and pet stores. Products sold online were not allowed to be delivered unless deemed essential”.

Exhibit 1: Smartphone Shipment Decline by Region & Country, Q1 2019 vs Q1 2020

Source: Counterpoint Research Market Monitor Q1 2020

Commenting on the brands’ performance, Parv Sharma, Research Analyst, highlighted: “Another effect from the regional shutdown was the increase in brand concentration. The top 5 brands represented 76.3% share of the smartphone market, 3.3 percentage points higher than the same quarter last year. Xiaomi was the only brand that increased its volume during Q1 2020. Samsung dropped in volume but managed to increase its share. The vendor’s production pivot to Vietnam reduced China supply chain exposure, positioning it well among more China-dependent competitors”.

 

Exhibit 2: Smartphone Shipment Market Share 2020 Q1

Source: Counterpoint Research Market Monitor Q1 2020

 

Key Takeaways

  • Samsung was once again the absolute leader in the region. The COVID-19 crisis benefited it by increasing its share and widening the gap to its closest competitor.
  • Motorola’s shipment decreased by more than -26% compared to the same period last year. Motorola has manufacturing sites in Wuhan, which impacted the brand’s supply chain during most of February and part of March.
  • Despite the drop in shipment volume for Motorola, most of LATAM market sales channels did not experience a lack of inventory from the brand, during the quarter.
  • Huawei share and volume was also impacted, but not so much by the COVID-19 crisis. Instead, it was hit by the US trade ban. Mexico and Chile remain Huawei’s biggest markets, representing more than 60% of its regional volume. However, it has been steadily losing steam in Colombia.
  • Xiaomi more than tripled its volume YoY. It has started to get aggressive in Brazil, in which it has already opened two stores this year in Sao Paulo. It is also negotiating to start local manufacturing.
  • LG continues to decline YoY in the region. Brazil and Argentina remain the only markets in which it manages to hold market share.
  • Apple grew in volume and share compared to the same period last year. iPhone 11 is driving the growth of Apple in the region.
  • Other brands also saw steep decreases, with many at around half the volume from a year ago. This included not only ‘local kings’ but also small Chinese brands, which were all impacted by handset supply issues.
  • The feature phone market only declined by 0.3%. It has proven to be more resilient than the smartphone market.

 

The comprehensive and in-depth Q1 2020 Market Monitor is available for subscribing clients. Please feel free to contact us at press@counterpointresearch.com for further questions regarding our latest in-depth research, insights or for other press enquiries.

The Market Monitor research is based on sell-in (shipments) estimates based on vendor’s IR results, vendor polling triangulated with sell-through (sales), supply chain checks and secondary research.


 

Analyst Contacts:

Tina Lu

+54 91160411221

tina@counterpointresearch.com

Parv Sharma

+91 974-259-6030

Parv@counterpointresearch.com

Peter Richardson

+44 791-723-1934

Peter@counterpointresearch.com

 

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Is Argentina on the path to recovery?

Argentina’s political and economic landscape is going through huge changes. Last week Th. Mauricio Macri, the new Argentine president, took office.  Macri is the former mayor of CABA, the capital city of Argentina, and belongs to a coalition between the independent party that he created, and the opposition party the traditional UCR.  He is more center-right wing position, unlike the former president Kirchner’s administration that was a left-populist government.  Putting the country back on track, after 12 years of very draining government will not be an easy task.  Neither will it happen overnight; it will take at least a year to fully stabilize the economy.

Mkt evolution Arg

Expected impact on mobile devices market

Argentina’s mobile devices market size has dropped in the last few years. We don’t see major changes in the market size between 2015 and 2016.  Mainly due to expected consumer contraction during 1H 2016. This contraction is the result of currency devaluation and high inflation.

Below is the summary of some risk and opportunities for the Argentinian market for 2016.

  • Market size 1H 2016 sales of devices likely contract in the short term – first 3-6 months of 2016, due to currency devaluation. Inflation is expected to remain high during 1H 2016 driving handset pricing and therefore longer replacement cycles.
  • Market size 2H 2016. We expect the market size to increase in the mid-term. During 2H 2016 consumer sentiment is likely positively impacted due to increasing private employment creation and inflow of foreign investment.
  • Import restriction reduce. This will allow new entrants into the market – including Apple; Chinese vendors such as ZTE, Lenovo, Xiaomi, etc., and last but not least regional players such as Avvio, Lanix, Bmobile, etc. Premium and also low-end devices are likely to be the focus of initial imports as mid-range demand is somewhat fulfilled.   However, lifting mobile device import restrictions will likely take time and is therefore not expected until later in 2016. This control was not legally ruled; rather just imposed by the previous administration.  Therefore, the permission can technically be restored any time.  However, there are local companies and workers to protect.  So a measured lifting of restrictions is most likely.
  • Devaluation of the official exchange rate. The exchange rate can go as high as ARS 16 to USD 1. Impacting prices hence purchasing power. Devaluation happened this week, and it is currently trading about ARS 14 to USD 1. This might increase inflation during 1H 2016 and reduce, for example, the level of overseas travel.
  • New retailers entering the market, Best Buy and some online retailers are considering entering the market. This will increase competition and reduce share of current leaders, such as Garbarino and Fravega.
  • Operators increase investment in new technology deployment. Currently many consumer do not care about purchasing an LTE device, as coverage is very limited. However, if LTE coverage increases, consumer will demand more LTE enabled devices.
  • Inflation decrease, this not only increases consumer confidence but can also lead to lower interest rates. Lower interest rates are key to enabling installment payment options. If implemented, installment plans can drive device renewal. This is unlikely before late 2016 or early 2017. The cost of living is likely to increase during 1H 2016, as many public services will no longer be subsidized.

Argentina 2016 Risk and Opportunities Timeline

Mkt risk n oppor Arg

Argentina is on the path to recovery.  But it might not be a smooth ride, rather a patchy one, especially during 2016.  However, by the end of 2016, once major problems like inflation and devaluation are ameliorating, mobile devices and services demand will start to surge. 2016 should be the year of preparation, for the forthcoming market expansion.

by: Tina Lu

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