South Africa’s smartphone market growth supported by accelerated feature phone-to-smartphone migration.
Samsung led the market but its share declined as HONOR, Huawei and TECNO gained.
HONOR was the fastest-growing brand and captured the second position for the first time in Q3 2023.
Smartphone shipments in South Africa grew 73% YoY and 44% QoQ in Q3 2023, according to the latest research from Counterpoint Research’s Market Monitor Service. The market reached its highest levels since 2021, just before the macroeconomics-related global slowdown started. In Q3 2023, the market was also helped by the increased feature phone-to-smartphone migration as Chinese OEMs tapped into the entry price bands.
Commenting on the market performance, Senior Research Analyst Yang Wang said, “South Africa is among the fastest-growing smartphone markets in the MEA region, and major Chinese players are increasing their focus on this market. South Africa’s market is growing rapidly and has breached its 2021 levels before the macroeconomic crisis put a dent in the global economy. As the nation’s economic situation is recovering, Chinese OEMs are aggressively trying to capture demand. The entry of HONOR has further tightened competition in the market as it poses a strong competitor against Xiaomi and Samsung in the low- and mid-tier segment.”
Most of the major smartphone brands recorded a double-digit YoY percentage growth during the quarter and are rushing to fill the market with newer offerings to capitalize on the recovery in demand. Major Chinese players are getting aggressive and are launching multiple products in the lower price tier to further accelerate the migration from feature phones to smartphones.
Samsung led the market during the quarter, despite stiff competition from the aggressive Chinese players. It was the leading brand across all the price segments and the A-series devices continued to drive volumes. Samsung’s foldable devices are among the leading models in the premium segment.
HONOR surpassed Xiaomi to become the second-biggest smartphone brand during the quarter due to aggressive marketing activities, and improved device availability across channels. HONOR focused on low- and mid-priced smartphones and provided stiff competition to Chinese players Xiaomi and TECNO. During the quarter, HONOR also entered the premium segment with the launch of the HONOR 90 5G and 90 Lite 5G. The brand offered a free HONOR Watch 4 with the 90 5G model and HONOR Choice Earbuds X5 with the 90 Lite 5G.
Xiaomi narrowly lost its second spot to HONOR, despite its share increasing YoY during the quarter. It is focusing on increasing its channel reach. Xiaomi’s Redmi 10 and Note 11 series were the volume driver. Xiaomi is among the leading players in the low-tier price segment (< $100) due to the popularity of its Redmi 10A, 10C, and A1 series.
Transsion Group is another major player in the market, benefitting from strong demand for the TECNO and itel brands. Meanwhile, Infinix has not been able to make a presence in the market. TECNO is focusing on the low- to mid-end market while itel is focusing on the lower-end market and is the leader in its segment. TECNO’s Pova and Pop, and itel’s A series were the volume drivers. TECNO is among the leading players in the sub-$200 price range, while itel leads the <$100 segment.
South Africa is still facing an energy crisis, but we note that major macro indicators are stabilizing due to the easing of inflation and unemployment rates. Chinese players are starting to notice MEA markets in general, and South Africa will be seen as a particularly attractive market due to the higher income levels and better connectivity infrastructure. South Africa’s market is expected to grow further in the high-end segment driven by the increasing premiumization trend, and Samsung and Apple are likely to benefit the most.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
MEA smartphone shipments grew 23% YoY and 11% QoQ in Q3 2023 to reach their highest levels since the onset of the global economic crisis.
The feature phone-to-smartphone upgrade cycle observed in 2021 resumed in Q3 owing to improvements in macroeconomic conditions. The share of smartphones in total handset shipments reached 61%.
Samsung led the market but Xiaomi, TECNO and HONOR were the biggest gainers. Transsion Group brands captured over a third of total MEA smartphone shipments.
The wholesale average selling price of smartphones sold in the region continued to increase, with the price bands above $200 continuing to gain share.
London, Boston, Toronto, New Delhi, Hong Kong, Beijing, Taipei, Seoul – November 21, 2023
Smartphone shipments in the Middle East and Africa (MEA) region grew 23% YoY and 11% QoQ in Q3 2023, according to the latest research from Counterpoint’s Market Monitor Service. Many major markets recorded YoY improvements in their key macroeconomic indicators, like unemployment and inflation, which helped improve consumer sentiment during the quarter. This led to the resumption of the feature phone-to-smartphone upgrade cycle which was last observed driving the market in 2021. The smartphone share of total handset shipments rose to 61% in Q3 2023.
Commenting on the market’s performance, ResearchAnalyst Ravyansh Yadav said, “The MEA region grew the fastest among all regions, building on the momentum from Q2 2023 as economies continued to recover. This also made OEMs aggressive in capturing demand. The market reached levels last observed in 2021, before the global macroeconomic crisis, from which many developed markets are still struggling to climb out. The MEA region has huge untapped potential, especially due to rapid digitalization and a rising services economy. The smartphone is becoming increasingly more essential in the region, a trend we observed nearly a decade ago in developed markets like North America, Europe and East Asia.”
Most major brands recorded YoY growth, rushing to fill channels with new launches to capitalize on the recovery in demand and the upcoming promotions season in Q4. Consequently, brands are likely sitting on some channel inventory going into Q4. Brands and channels are likely to host multiple promotional events through Q4, like the 11.11 and Black Friday sales in November hosted by major channels like eXtra and Jumia.
Samsung led the market, as shipments grew marginally YoY, with its 2023 A-series devices continuing to drive volumes. Samsung’s latest foldables outperformed their predecessors in the region, but volumes remained low.
HONOR was the fastest-growing top-10 brand, having increased marketing activities and improved device availability across channels over the past few quarters, largely in the Middle East and some African markets. HONOR made significant gains in South Africa in Q3, where it narrowly edged out Xiaomi for the #2 spot.
Xiaomi was aggressive with channel fills in the region throughout the quarter, likely in a bid to recapture share amid stiff competition from the regional stalwarts of Transsion Group. Xiaomi’s Redmi 12 and Note 12 series have been especially popular in the region, particularly in South Africa and Egypt.
TECNO was among the biggest gainers in Q3, benefitting from strong demand for its recent launches like the Spark 10, Pop 7 and Camon 20 series, particularly in Nigeria and other key markets in Africa. TECNO’s success has likely come at the expense of its sister brands Infinix and itel. While Infinix recorded YoY growth driven by multiple recent launches like the Hot 30 and Note 30 series, itel’s shipments declined YoY. While this is partly due to an ongoing shift in Transsion’s portfolio strategy, it also signals a broader market trend of demand moving to higher price tiers and consumer aspirations for better devices.
Commenting on the MEA smartphone market’s price trends, SeniorAnalyst Yang Wang said, “Consumers are increasingly opting for better devices, which have become more affordable owing to a rise in financing options. Apple has benefitted greatly from this, with its shipments steadily growing YoY over the past year. The wholesale average selling price (ASP) of smartphones sold in MEA has also grown 13% YoY, with the share of price bands above $200 continuing to increase. This trend is likely to continue as the MEA region, like many regions before, approaches maturity within the next decade driven by a rapidly rising digital economy.”
The MEA region represents the next big market opportunity for smartphone brands, as the feature phone-to-smartphone transition continues to drive demand. Furthermore, the market is expected to continue moving to higher price bands, eventually riding the premiumization wave seen in other markets across the world. While regional stalwarts like the Transsion Group brands and Samsung are likely to benefit most, there is an opportunity for new entrants as well as existing players in the market, as showcased by HONOR and Apple over the past few quarters. Brands with a streamlined and accessible portfolio, focus on building relationships with channel players and financial service providers, and strong distribution activities in the region are most likely to make gains as the MEA smartphone market continues to grow.
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Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
Europe’s smartphone shipments declined 11% YoY in Q3 2023.
Samsung touched its lowest Q3 shipments since 2011.
Apple captured a higher market share despite its lowest Q3 shipments since 2014.
HONOR was back in the top five after three years with strong growth in Western Europe.
London, New Delhi, Jakarta, Boston, Toronto, Beijing, Taipei, Seoul – November 20, 2023
Europe’s smartphone shipments declined 11% YoY in Q3 2023, according to the latest report from Counterpoint Research’s Market Monitor Service. Western Europe declined by 8%, indicating a slight recovery from the 14% decline in the previous quarter. However, Eastern Europe declined by 15% due to continued economic and geopolitical challenges.
Commenting on the overall market, Research Analyst Harshit Rastogi said, “Q3 2023 saw the lowest Q3 smartphone shipments since 2011. However, some OEMs have managed to gain a foothold in the market, such as Transsion brands TECNO and Infinix (particularly in Russia), while HONOR is doing well in Western Europe. Even as the market shares of top players remain the same, Chinese OEMs are switching ranks among themselves.”
Commenting on the outlook, Associate Director Jan Stryjak said, “While the market continued to decline, major launches like the iPhone 15 series and Samsung’s fifth-generation foldables softened the fall. The rate of decline is slowing and, while we aren’t holding out a return to growth just yet, we are optimistic about a strong end to the year in Q4. Economic conditions continue to be tough, though, and people are holding on to their devices for longer than ever. Therefore, we expect the market to remain muted for the foreseeable future.”
Market summary for Q3 2023
Samsung declined 15% YoY and reached its lowest Q3 shipments since 2011. The decline was mitigated by the launch of its new foldables, which received a warm reception in the region.
Apple reached its highest Q3 share at 24% despite declining by 3% YoY and touching its lowest Q3 shipments since 2014. The OEM will likely lead in the coming quarter owing to pent-up upgrade demand for the iPhone 15 series.
Xiaomi declined by 13% in Q3 2023 but remained the top player in Eastern Europe, capturing 35% of the market. The brand is also facing backlash in some Western European markets (like Finland) due to its continued presence in the Russian market.
HONOR was the only brand among the top five to grow YoY, inching closer to levels before its split from Huawei and entering the top five. The brand is likely to take market share from other Chinese OEMs (like OPPO).
Transsion brands TECNO and Infinix surged in the region, growing 192% and 518% respectively, with Russia being the primary market for both. In the coming quarters, the competition among the Chinese OEMs will intensify even as parallel imports sustain the market for Samsung and Apple.
OPPO’s uncertainties in the region were reflected in its shipments, which declined 23% YoY. However, Eastern Europe limited the brand’s regional decline with 27% growth. In the coming quarters, the brand will likely face more issues in Western Europe.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
Southeast Asia’s smartphone shipment volumes declined 2% YoY but increased 3% QoQ in Q3 2023, signaling a recovery in the region’s smartphone demand.
The fastest-growing brands were TECNO (148%), Infinix (42%) and Apple (19%). All three Transsion brands collectively grew by 62% YoY in Q3 2023.
Samsung led the market with a 21% share, followed by Xiaomi (17%) and OPPO (15%).
Indonesia and Thailand saw flattish growth while other SEA countries like the Philippines, Malaysia and Vietnam declined YoY.
5G smartphones captured 36% of overall shipments in the region.
Jakarta, Hong Kong, London, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – November 9, 2023
Southeast Asia’s smartphone shipments declined 2% YoY but increased 3% QoQ in Q3 2023, signaling a recovery in the region’s smartphone demand, according to Counterpoint Research’s Southeast Asia Monthly Smartphone Channel Share Tracker. Stronger macroeconomic indicators, aggressive new OEM launches and aggressive promotions by OEMs and other platforms were the main growth contributors. Also, an uptick was seen in the replacement cycles of consumers opting for low-to-mid-tier smartphones. TECNO, Infinix and Apple emerged as the fastest-growing brands during the quarter.
Most key SEA countries like Indonesia, Malaysia, Philippines and Vietnam showed a double-digit decline in Q2 2023, but they improved in Q3 2023, hinting a relief for OEMs ahead of an important festive quarter. However, on an annual level, we foresee a YoY decline of about 8% for the region in 2023.
SEA remains an important market for the tech ecosystem due to its underpenetration in many areas, like online banking, e-wallet usage, online shopping and overall internet usage.
Source: Counterpoint Research Southeast Asia Monthly Smartphone Tracker, September 2023
Key country insights
Indonesia and Thailand saw flattish growth in smartphone shipments while other key SEA countries like the Philippines, Malaysia and Vietnam declined YoY.
In Thailand, the new government launched several initiatives, such as delaying debt payments, lowering energy prices and offering cash handouts, to ease the citizen’s cost of living. This brought immediate effect on commodities. Besides, in September, the government announced visa-free entry for tourists from China and Kazakhstan, bringing much relief to the country’s COVID-hit tourism industry.
In Indonesia, OEMs launched several new models in the middle and end of September. The new launches made up a big share of the overall shipments. During the quarter, Indonesians preferred to wait and watch when it came to spending money. The country is gearing up for its legislative and presidential election in February 2024. We expect Q4 2023 to see more smartphone sales due to aggressive offers.
Vietnam’s economy has picked up with its exports coming back on track. GDP grew 5.33% in Q3 2023, beating expectations. Foreign investment is expected to rise with Vietnam entering strategic partnerships during the prime minister’s visit to the US in September.
In the Philippines, the economy is showing signs of recovery. Consumer confidence has improved. Unemployment is a concern and essentials are still expensive for low-income families. Due to easing inflation, the coming months might see increased household spending. Overall, the household expenditure levels might take some time to recuperate, which might affect smartphone purchases.
In Malaysia, industrial manufacturing is still slowing down due to weaker demand for electrical and electronic products. Weaker exports have added to the decline in GDP as well. Malaysia’s 5G connectivity and penetration are improving now but the overall industry is being affected by China’s economic headwinds.
Source: Counterpoint Research Southeast Asia Monthly Smartphone Tracker, September 2023
Key OEM insights
Beating the trend, Apple’s shipments increased by 19% YoY during the quarter. Apple is still seeing a strong demand for the iPhone 13 and 14 series, adding to the demand for the newly launched 15 series.
Samsung led the market with a 21% share. Its A05 series has entered the market, adding to a strong overall A-series presence. Premium models like the Z Flip 5 and Z Fold 5 along with the S series are contributing as well. Promotions for the brand are centered around these premium models not only in countries like Thailand and Vietnam but also increasingly in countries like Indonesia and the Philippines. This is due to premium smartphone purchases by well-to-do consumers who are least affected by current headwinds. Samsung was the top brand in Indonesia, Thailand and Vietnam in Q3 2023.
Xiaomi’s shipments grew 7%. Its Redmi 12 series has been doing quite well across all key SEA countries. Its promotions and new model launches were also better than most other brands during Q3 2023, which helped the brand increase shipments. Xiaomi was the top brand in Malaysia in Q3.
Transsion witnessed the highest growth during the quarter. Infinix grew 42% YoY, TECNO 148% and itel witnessed a 17% growth. Infinix and TECNO are offering strong base specifications along with a varied model portfolio.
realme saw flat growth during Q3 2023. It was the top brand in the Philippines.
Commenting on brand dynamics in Q3 2023, Senior Analyst Glen Cardoza said, “Samsung and Xiaomi have been able to market their models in a much better manner across all key SEA countries, while sustaining new launches across price ranges, compared to the limited options from brands like OPPO and vivo. Upcoming brands are making a mark as well. Among them, the Transsion brands lead. TECNO and Infinix have either sustained or increased their new model launches, all in the entry to mid-tier segments. The three Transsion brands collectively grew 62% YoY in Q3 2023.”
While 5G penetration still has some way to go in countries like Indonesia, Vietnam and Malaysia, 5G is increasingly becoming a key consideration for consumers. Many consumers want their phones to be 5G ready. During Q3 2023, 5G smartphones captured 36% of overall shipments in the region.
The region’s key macroeconomic parameters like China-ASEAN trade, startup funding and foreign direct investment continue to see YoY declines. Add to this a recovering tourism industry. This has led to low GDP levels across most SEA countries. Price-conscious consumers have waited all year for the situation to get better, spending the least on discretionary items. On the positive side, digital transformation continues even as the industry recuperates slowly. This means that we can expect a better Q4 of 2023.
* Key Southeast Asia countries/markets include Indonesia, Thailand, Philippines, Vietnam and Malaysia.
Feel free to contact us at press@counterpointresearch.com for questions regarding our latest research and insights.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
Global smartphone sell-through declined 8% YoY but grew 2% QoQ in Q3 2023.
Samsung led the market but declined YoY to reach its lowest quarterly level in the last decade.
A shorter period of iPhone 15 availability in Q3 led to a shift in demand to the next quarter.
The top five brands’ cumulative share declined in Q3 as challengers’ share grew.
HONOR, Huawei and Transsion Group were among the only top brands to record YoY growth
Global smartphone sell-through volumes fell 8% YoY in Q3 2023, the ninth consecutive quarter to record a decline, but grew 2% QoQ, according to the latest research from Counterpoint’s Market Pulse service. Volumes declined YoY largely due to slower than expected recovery in consumer demand. But the market’s QoQ growth, especially the positive performance in September despite one full week less of sales of the new iPhones, is likely a sign of positive news ahead.
Samsung continued to lead the global market, capturing a fifth of the total sales in Q3. The new generation of foldables received a mixed response, with the Flip 5 outselling its counterpart by nearly twice as much. However, Samsung’s A-series models remained market leaders in mid-price bands. Apple came in second with a 16% market share despite the limited availability of iPhone 15 series, which has been received well so far.
Xiaomi, OPPO and vivo rounded off the top five, with the three recording YoY declines. In Q3, all these brands worked towards strengthening their positions in key markets like China and India, while continuing to slow down expansionary efforts in overseas markets.
HONOR, Huawei and Transsion Group gained share and were among the only brands to record YoY growth in Q3. Huawei grew driven by the launch of the Mate 60 series in China, while HONOR’s growth was led by strong overseas performance. Transsion brands continued to expand while also benefiting from the recovery in the Middle East and Africa (MEA) market.
MEA was the only region to record YoY growth in Q3, owing to improvements in macroeconomic indicators. Most developed markets, like North America, Western Europe and South Korea, recorded steep declines. However, we expect most developed markets to grow in Q4 largely due to the delayed effect of the iPhone launch.
Following a strong September, we expect the momentum to continue till the year-end, beginning with the full impact of the iPhone 15 series along with the arrival of the festive season in India, followed by the 11.11 sales event in China and ending with the Christmas and end-of-year promotions across regions. In Q4 2023, we expect the market to halt its series of YoY declines.
However, the market is expected to decline for the full year of 2023, reaching its lowest level in the decade largely due to a shift in device replacement patterns, particularly in developed markets. Notably, the recovery of emerging markets before the global market and the growth of brands outside of the top five indicate the shifting dynamics and opportunities in the global smartphone market.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
Expansion, Premiumization Drive Transsion’s Record Quarter
September 4, 2023
Transsion Holdings reported revenues of RMB 25.03 billion for the first half of 2023, registering a growth of 8.3% YoY. Net profit grew 27.2% YoY primarily due to better product mix (higher proportion of smartphones as compared to feature phones, with the former accounting for 92% of group revenues) and geographical expansion into higher-value markets.
Q2 2023 was the bright spot as revenues were up 30.7% while net profit grew 83.9%. It was the best quarter in Transsion’s history in both revenue and net profit terms. Gross margins also improved to 24.5%, up 2.4% from a year ago.
Much of Transsion’s turnaround in the key financial metrics above can be attributed to a rebound in macroeconomic fundamentals in the African home market and beyond. Most importantly, inflation rates have come down while food prices have stabilized. Local currencies have also found a stronger footing while several indebted countries across the emerging markets have managed to secure restructuring packages with lenders. As Africa’s most entrenched handset company, thanks to its deep channel penetration and marketing heft, Transsion once again benefitted the most from the upturn.
Transsion’s operating cost in H1 2023 increased 5% YoY as the company is ramping up its operations, particularly in newer markets. It has been aggressive with sales and marketing despite the cyclical downturn, with the spending on these activities increasing 23.6% YoY in H1 2023. R&D spending was also up 20.6% YoY to drive premiumization efforts and develop higher-value products to target the new markets. Costs attributed to management grew 6% YoY, whereas cash flow from operating activities turned positive, primarily due to the reduction in the cost of components and materials, as the company is reducing its inventory and moving towards a leaner operating model.According to Counterpoint Research, Transsion’s smartphone sales volume grew 3% YoY in the first half of 2023 and 17% YoY in Q2 2023 as demand for TECNO smartphones increased globally, especially in the company’s newer markets. This helped Transsion’s cash flow, as cash on hand increased 61% YoY to reach an all-time high of RMB 12.79 billion. The number of inventory days dropped further to 61, from 86 a year ago. Therefore, the inventory problem that has been troubling the company for the past year has successfully been managed.Much of Transsion’s financial successes can be attributed to its continued commitment to entering new markets. In Q2 2023, Africa accounted for 57% of Transsion’s smartphone sales volume, a net drop of 8% from a year ago. Outside Africa, Transsion smartphone sales grew 35% in Q2 2023, most notably in Latin America, Eastern Europe, India and Southeast Asia.
The reason for Transsion’s big increase in profitability is found in its ability to upsell to customers. Average selling prices (ASP) for Transsion smartphones rose by 14% YoY for two years in a row. The MEA region anchored the increase as a big expansion into the Middle East was the main factor. In a bid to replicate its success in Africa, Transsion has targeted the low end when entering new markets, but there is potential for the company to grow beyond the current level.
While Transsion continues to enjoy stable gross margins of around 30% in Africa, the company does face a more competitive landscape in the rest of the world, with gross margins of 15%-20%. However, there is room for improvement as the company continues with its premiumization strategy. In a recent interview, Transsion VP Qi Zhang said the company would be launching a flip foldable in September in another attempt to showcase its technical prowess in the premium segment.
Q3 Revenue Stays Resilient, But Profit Declines Sharply as Costs Balloon
December 13, 2022
Transsion Holdings has reported flat revenue growth for Q3 2022 at 12.9 billion RMB. However, net profit slumped 47.4% YoY due to macroeconomic headwinds, inventory destocking initiatives, competitive pressures, and higher R&D and market expenditure.
Transsion Group Quarterly Revenue and Net Profit Margin
Transsion’s Q3 smartphone shipments fell 18% YoY, as emerging market demand was hammered by macroeconomic concerns. Inflation rates ticked higher, continuing the pressure on lower-income consumers with high food and energy prices. Local currencies too continued to depreciate against the US dollar.
Despite the big drop in shipment numbers, Transsion’s revenues still achieved positive growth. This was due to a big increase in smartphone selling prices. TECNO and Infinix’s average selling prices (ASPs) rose 26% and 28% YoY respectively. Transsion was able to achieve this due to successful iterations of mainstream devices across TECNO and Infinix, while launching more sophisticated devices that have gathered popularity among aspiring switchers. On the other hand, bringing higher-value products to more mature markets in India and Southeast Asia meant higher contribution from higher-end products to the company’s revenue mix.
Transsion Group Financials Deep Dive – Sales, R&D and Inventory
Three items, in particular, caught our attention in Transsion’s Q3 report:
Inventory: Since the COVID-19 lockdowns, Transsion has moved decidedly away from the feature phone business and into the smartphone business. In parallel, inventory levels have also crept up, reaching an all-time high of 80% of quarterly revenues in Q2 2022, which caused discomfort for the management. In Q3, this level was brought down to a more manageable 57%, which put pressure on margins in the quarter but removed a significant uncertainty for future quarters, as the smartphone market is not expected to rebound until well into 2023.
Sales cost: Other than the cost of goods sold, sales costs represent the biggest cost item in Transsion’s income statement. In a year when Transsion has reported slowing revenue growth, its sales costs have increased significantly as the company paves the way for an aggressive expansion into other regions. Transsion will be hoping the global smartphone market recovers quickly in 2023, but its investment case could come into doubt if smartphone shipments and market share do not pick up meaningfully in its key markets in the next few quarters.
R&D: Transsion is spending heavily on R&D, which is an encouraging sign as the company aspires to move into higher-value smartphone segments and other smart device categories. We expect this trend to continue as the window of opportunity for entry-level devices narrows, considering device costs are expected to creep up, in line with the inflation rate.
Last quarter, we discussed Transsion’s stock options plan for 2022, which is linked to 2024 financial metrics. We expect the company to target 20-25% annual revenue growth rates for both 2023 and 2024. Much of this will depend on the company continuing to move up the smartphone value chain with 5G-capable devices, entry into IoT segments and monetization initiatives for its wide user base. Above all, the recovery of the global economy and smartphone market will be pivotal for Transsion as it gradually becomes more exposed to a wide range of different geographical locations.
Resilient Q2 Performance Driven by Pivot to Value, But Macroeconomic Challenges Remain
August 29, 2022
Transsion Holdings reported a 3.7% YoY increase in its Q2 2022 revenue to RMB 12.1 billion and a 4.5% YoY decline in net profit to RMB 1.04 billion. Considering the macroeconomic headwinds in Transsion’s core markets, the increase in revenue was a bright spot, especially compared with Q1 when the company posted a quarterly revenue drop for the first time since its market debut in September 2019.
Transsion Group Quarterly Revenue
Transsion’s Q2 smartphone shipments grew 4.1% YoY, an impressive performance despite a shrinking global market, which retreated 9% YoY during the quarter. Geopolitical tensions and high inflation rates have hurt the global smartphone market in general. Further, companies exposed to the low- to mid-end segments and emerging markets are more prone to secondary impacts, such as the strain on customers from high food and energy prices, weaker local currencies against the US dollar, and higher government taxes and levies on ‘non-essential’ imports like consumer electronics.
Transsion Group Q2 2022 Smartphone Shipments Analysis – Growth and Regional Contribution
Source: Counterpoint Market Monitor Service
Transsion defied these global trends through resilient performance in its Africa home market and strong growth in other regions, most noticeably in India and Southeast Asia. In both these regions, Transsion is ranked sixth in terms of shipments, helped by the company’s double-digit annual growth rate. Gaining a foothold in these new markets helps the company diversify its revenue sources and also allows the company to move up the pricing curve. According to Counterpoint’s Model Sales Service, Transsion’s smartphone average selling prices (ASP) increased 14% YoY, mainly driven by the success of the company’s TECNO and Infinix brands. The brands’ latest products received good market reception and are edging closer to the $150 mark.
Due to the increased pricing, Transsion’s Q2 normalized gross profit margin reached 22.9%, up 1.4% YoY, to reverse a six-quarter slump. However, the bottom line retreated, mainly due to a significant 40% increase in R&D spending. In our view, this is a positive sign that the company is moving out of its comfort zone of focusing only on pricing competitiveness in its African home market and committing to make more sophisticated products for the higher value markets.
Despite our positive commentary, we also recognize the significant challenges brought on by the macro environment, which is not likely to ease in the near term. In Q2 2022, we observed inventory challenges across handset and component makers, including Transsion. The company’s inventories reached RMB 9.6 billion as at the end of Q2, 27% higher than that in Q4 2021 and 73% more than in Q4 2020. Currently, inventory levels are 19% of the company’s 12-month trailing revenue, which could become an issue if it remains high or if revenue declines in the coming months.
We also note that the company’s recently announced stock options plan for 2022 is linked to its targeted 2024 financial metrics. The plan suggests that the company forecasts revenue and net profit to increase 15% and 32.25% respectively as a baseline case, or 20% and 44% respectively as a bull case by 2024. The targets are compared with the metrics from 2021, which was a strong financial year for Transsion, indicating that the company is extremely bullish about the next couple of years.
Growth Worries in Africa, India See First Revenue Drop Since COVID-19, But Diversification Efforts on Track
June 6, 2022
Transsion Holdings reported Q1 2022 earnings that saw revenues and net profit drop 1.8% and 7.6% YoY respectively. This is Transsion’s first revenue and profit drop since it went public in September 2019. The company’s performance during the quarter was impacted mainly by the stalled growth in its home market Africa and in India, which saw inflationary pressures hitting lower-income consumers significantly. Smartphone sales were down in the region for the first time since the pandemic. However, the company was cushioned by growth in other regions, and margins remained intact despite inventory build-up.
According to Counterpoint Research’s Market Pulse service, cumulative Transsion smartphone shipments reached 18.9 million units in Q1 2022. This was a small increase of 1.6%, the slowest YoY growth rate since the pandemic.
Transsion Group Quarterly Smartphone Sales
Source: Counterpoint Market Pulse Service
Looking further under the hood, there are significant regional disparities, however. In Africa, Transsion saw a 7% decline in smartphone sales in Q1 2022, mainly due to the inflationary impact on consumer sentiment. Most large African markets were already running double-digit inflation during 2021, but the Ukraine war had far-reaching consequences as food imports were hampered, affecting lower-income consumers more. Depreciating local currencies also put pressure on the company’s supply chain and margins.
In India, similar macro concerns and impact of the Omicron wave saw the smartphone market record the first Q1 drop ever. Here, Transsion smartphone sales dropped 22%. The market sentiment in India is expected to remain weak in Q2, but sales are likely to see growth due to the low base of Q2 2021 when the market was hit hard by the Delta wave.
On the other hand, Transsion had resilient performances in the Middle East and APAC, which show its diversification efforts are working. In both regions, the company is finding success in penetrating the entry-level segment in key countries like Pakistan and Bangladesh. Transsion’s 79% sales increase in APAC runs counter to the broader market. In the Middle East, the 18% sales increase is likely to extend further in 2022, as the region is expected to be the best-performing smartphone market due to the economic growth driven by oil revenue increases, mainly in Gulf Cooperation Council (GCC) countries.
Transsion Group Smartphone Sales by Region, Q1 2022 vs Q1 2021 (In million units)
Source: Counterpoint Market Pulse Service
Transsion’s normalized gross profit margins for Q1 2022 decreased to 21.4%, or 2% less than the same period in the previous year. Significant cost pressures persisted due to lingering supply chain disruptions, component shortages and high inventory levels. Rising revenues from other regions are also likely to cap the company’s margins, as it enjoys far higher margins in its home market Africa. However, Transsion now derives 87% of its revenues from the smartphone business, and as feature phone-to-smartphone migration continues for its emerging market customers, we see further room for the company’s revenues and margins to grow.
Transsion signs off 2021 in style: Smartphone market share continues to increase in emerging markets
April 28, 2022
Transsion Holdings reported 2021 results with revenues up 31.8% YoY and net profit up 45.5% YoY. These results were driven mainly by increasing smartphone sales and market share, which widened in the core African market, while achieving breakthroughs in key South Asian countries like Pakistan, Bangladesh and India. IoT and internet services, which accounted for 6.5% of the group’s revenues in 2021, also saw robust triple-digit growth.
According to Counterpoint Research’s Market Monitor service, cumulative Transsion handset shipments reached 184 million units in 2021, an all-time high. Smartphones, in particular, grew 61%.
Transsion Group Handset Shipment and Revenue Analysis
Sources: Counterpoint Market Monitor Service, Transsion Group financial statements
Transsion continued to do well in its home market Africa, where it already dominates with close to 45% share across its three brands. However, Africa accounted for only half of the shipment increases in 2021. In India, Transsion almost doubled its smartphone sales in one year, while the company is already the biggest smartphone OEM in Pakistan. As such, Transsion smartphone sales attributed to Africa decreased from 67% in 2020 to 56% in 2021. A widening geographical footprint, accompanied by an enriched portfolio, can help the company diversify its customer base and increase its technical prowess.
The company also reported surprisingly good revenue growth from other businesses. Revenues not attributed to handsets, which mainly include IoT and internet services, grew 68% YoY to RMB 3.2 billion. Their contribution to group revenues now stands at 6.5%. This is due to new products in the wearables, TWS, notebook and TV categories. But more importantly, Transsion’s ‘Matrix of Internet Products’ became meaningful growth engines. Apps under the Transsion umbrella saw installations increase 240% YoY, with three apps – Phoenix, Boomplay and Scooper (with MAUs of 100 million, 68 million and 27 million respectively) – becoming main gateways to the internet for African users. User and eventually revenue growth from apps will become ever more important factors in Transsion’s future strategy, particularly in Africa, as its handset business will inevitably hit road bumps in the future.
Transsion IoT & Internet Services Analysis
Source: Transsion Group Financial Statements
Transsion’s normalized gross profit margins decreased to 21.3% for the year, after staying above 23% for the first three quarters of 2021. There were significant cost pressures in the second half of the year, especially due to supply chain disruptions and component shortages. We expect these issues to gradually ease in 2022 as the supply and demand dynamics in the semiconductor industry improve, and supply chains become more resilient to shocks. However, foreign exchange fluctuations and inflationary pressures in key markets will be the new destabilizing factors for the company, as risks shift from the supply to the demand side in the wider global handset market.
Transsion handset sales, profit continue to improve despite cost pressures
November 24, 2021
Transsion Holdings reported Q3 2021 results with revenues up 16% YoY and net profit up 33% YoY. These positive results were driven once again by further pivoting to smartphone sales, especially in the core African market. According to Counterpoint Research’s Market Monitor service, cumulative Transsion smartphone shipments surpassed 20 million units for the first time ever, coming in at 23 million. This represents a growth rate of 75% YoY.
Transsion Group Handset Shipment and Revenue Analysis
Sources: Counterpoint Market Monitor Service, Transsion Group financial statements
While feature phone shipment growth moderated in Q3 2021, the bulk of Transsion’s revenue growth was driven by smartphones. Heading into the Q4 holiday shopping season and 2022, we may see Transsion’s smartphone shipments overtake feature phones for the first time.
Over the past couple of years, as Transsion smartphones penetrated more markets, the average selling price (ASP) saw a noticeable increase. While the ASP showed a mixed trend in the second half of 2019, it increased decisively during 2020 and is showing no signs of slowing down in 2021. Looking at Transsion’s brands closely, TECNO, itel and Infinix saw ASP increases of 56%, 43% and 29% respectively over the past 18 months. These point to positive consumer sentiment and changing perception of digital and mobile services. More consumers in emerging markets now recognize that a decent smartphone is an important component of their daily lives.
Transsion Group Smartphone Average Selling Price ($)
Source: Counterpoint Handset Model Sales Service
Transsion’s normalized gross profit margins increased to 25.3% in Q3, compared to 25% in Q2 and 23% in Q1. The company managed to navigate the ongoing component shortages well and was able to pass upstream cost increases to consumers. Selling, General & Administrative (SG&A) expenses and financing costs dropped as well. Furthermore, ventures outside sub-Saharan Africa, including in higher value markets in Southeast Asia and the Middle East, contributed to higher profit margins. Profitability may increase further as the supply chain situation stabilizes in 2022.
Smartphone Sales and Profitability Double Boost as Company Diversification Efforts Gather Pace
September 30, 2021
Transsion Holdings continued to see strong performance in H1 2021 with revenues and net income growing 65% and 59% YoY respectively, driven primarily by surging handset sales in its home market Africa, as well as successful ventures in other developing countries. According to Counterpoint Research’s Market Monitor service, cumulative Transsion smartphone shipments in H1 2021 reached a record high of 37.3 million, taking the company’s share in the global smartphone market to 5.5% from 3.5% a year ago.
Counterpoint Research – Market Monitor Service
Looking at Transsion’s overall product strategy, we can see that it is shifting materially from feature phones to smartphones in response to market changes. In 2019, 33% of the company’s handsets were smartphones, but in the latest quarter this number has gone up to 47%. In the company’s latest earnings release, smartphones account for over 80% of its revenues, a record high.
Transsion financial report, Counterpoint Research analysis
Commenting on Transsion’s commitment to smartphones, Senior Analyst Yang Wang said, “Transsion is rapidly transforming and upgrading its product portfolio. The move is driven by the accelerating demand for internet-capable phones in its home market Africa, where the COVID-19 pandemic showed the value of the internet to consumers who were forced to stay at home. The region’s internet and mobile money services are also gathering steam along with a significant drop in data costs. While all OEMs stand to benefit from the consumer’s shift, Transsion gains the most as its distribution and pricing strategies are most ready to tap into new consumer clusters, which previously did not consider buying a smartphone.”
Counterpoint Research – Market Monitor Service
Apart from product transformation, the other significant shift in the Transsion strategy is geographical diversification. Compared to two years ago, Transsion’s share of smartphone shipments in the Middle East and Africa (MEA) region has dropped from 83% to 68%. On the other hand, shipments have increased rapidly in APAC countries such as India, Pakistan, Bangladesh, Indonesia and Thailand. India specifically has been the growth engine for Transsion, with shipments almost reaching 20% of the company’s global total in H2 2020, before the Delta wave halted the progress.
Commenting on Transsion’s moves in India, SeniorAnalyst Prachir Singh said, “Transsion brands, especially TECNO, have been focusing on a hybrid channel strategy in India, with an increased emphasis on online channels. This was executed with great success as Transsion brands contributed to 7% of the online smartphone market in India in Q2 2021, compared to 2% in Q2 2020. TECNO’s online smartphone shipments grew almost 20x YoY in Q2 2021, while itel increased its online share by launching online exclusive models like the Vision 1 Pro and A47. From a product positioning point of view, Transsion brands have been focusing on providing specs like higher display size, multi-camera capability and bigger battery, which are the top spec preferences for consumers in the sub-$150 segment.”
Going forward, Transsion’s fundamentals are expected to remain solid, as it continues to hold enormous clout in its Africa home market. Smartphone penetration will gradually expand, with new users continuing to be brought into the internet world. On the other hand, Chinese brands such as Xiaomi, OPPO and vivo are strengthening their market penetration efforts in certain African markets to address the medium-range segment (<$200). This price band is above Transsion’s typical playing field, so the newcomers are unlikely to affect its market share in the short term. However, we have seen in recent years Transsion’s effort to produce more premium phones and enter the <$200 price band. Therefore, there may be a time in the future when Transsion competes directly with the likes of Xiaomi, OPPO and vivo.
The Saudi Arabia smartphone market was among the few to record YoY growth in Q1 2023.
Even as many economies struggled in 2022 amid macroeconomic and geopolitical pressures, Saudi Arabia was bolstered by its highest oil revenues in decades, all-time-low unemployment rates, all-time-high non-oil economic activity and strong private consumption.
Among OEMs, Samsung and Apple continued to take over half of the total smartphone shipments in Q1 2023, with Samsung taking the #1 spot.
We expect the Saudi Arabia smartphone market to continue its growth momentum in 2023, with annual shipments likely to grow in low single digits.
The Saudi Arabia smartphone market was among the few to record YoY growth in Q1 2023, with shipments growing 26% YoY largely due to strong macroeconomic fundamentals, accelerating digitalization, and growing device financing options. In QoQ terms, the shipments grew 17% as OEMs filled channels for the Easter and Ramadan sales season, towards the end of the quarter.
Growth drivers
As many global economies struggled in 2022 amid macroeconomic and geopolitical pressures, Saudi Arabia was among the few to buck the trend. Bolstered by its highest oil revenues in decades as global oil prices soared, Saudi Arabia was the fastest-growing economy in 2022, with all-time-low unemployment rates, all-time-high non-oil economic activity and strong private consumption. PoS (Point of Sale) transactions, e-commerce activity and digital payments have also been on the rise in Saudi Arabia, all pointing to growing digitalization and private consumption. Some of the market momentum at the end of 2022 was carried into Q1 2023, especially after the economic boost provided by the FIFA World Cup in Qatar and the year-end and holiday season of Q4 2022.
Saudi Arabia Smartphone Shipments and 5G Share – Q1 2021 to Q1 2023
While the feature phone to smartphone migration has slowed down in Saudi Arabia, a growing digital economy and an aspirational customer have become key growth drivers. Commercial and private 5G use is also increasing in the country, pushing 5G smartphone sales. 5G technologies are a key part of Saudi Arabia’s digitalization and growth push under the Vision 2030 plan. The country has partnered with major 5G infrastructure players like Huawei and Ericsson, and 5G networks are now available in most major cities, covering around 80% of the country’s population. Saudi Arabia has also been hailed as a 5G pioneer in the region in terms of coverage, speed and consistency. 5G smartphone share remained above half of total smartphone shipments for the second consecutive quarter in Q1 2023 and is likely to grow further in 2023.
Competitive landscape
Saudi Arabia Smartphone Shipments by Top 5 OEMs for Q1 2021, Q1 2022, Q1 2023
Among OEMs, Samsung and Apple continued to take over half of the total smartphone shipments in Q1 2023, with Samsung taking the #1 spot. Xiaomi and Motorola were distant third, with HONOR rounding out the top five for Q1 2023.
Samsung grew YoY as its supply normalized in the region. The brand’s 5G models have been leading growth, especially the new affordable 5G M-series and A-series iterations. The Galaxy M53 was the best-selling Android device in the country in Q1. Samsung’s newest flagship Galaxy S23 series was shipped slightly earlier than the S22 series in 2022 to meet the pre-order demand triggered by aggressive marketing and promotions in the country, with most channels and offline stores participating.
Apple’s smartphone shipments nearly doubled YoY led by the popularity of its iPhone 14 series, especially the Pro versions, and as older models became affordable and available. Apple reached its highest-ever Q1 shipment share in Saudi Arabia in 2023. The brand has greatly benefitted from the rise of financing options, like the ‘Buy Now, Pay Later’ model, in Saudi Arabia, making its devices accessible to a greater demographic. Besides, a rising mean wage and stable exchange rates increased the average Saudi Arabian consumer’s purchasing power in 2022. iPhones took four of the top five spots in the bestseller list for Q1 2023, with the iPhone 14 Pro coming out on top.
While Xiaomi’s shipments grew YoY in Q1, it lost share marginally, as Motorola and HONOR gained share driven by new launches. Xiaomi has been able to maintain share largely due to its broad portfolio across price bands, innovative marketing strategies, and a strong presence across both offline and online channels.
Motorola has been gaining share, led by its offerings in the $150-$249 price band, particularly its G series, which accounted for nearly three-quarters of its total sales in Q1. Motorola has benefitted from improved product availability, especially for new launches, and strong brand pull, especially for middle-income customers looking for upgrades to their lower-segment devices.
HONOR was among the fastest-growing brands in Q1, with its shipments more than doubling YoY. HONOR’s growth is largely due to focused expansion efforts, aggressive launch campaigns and an attractive mid-tier to high-end portfolio. HONOR has also benefitted from utilizing Huawei’s earlier distribution and channel relationships. The HONOR 70 and the X series were the top volume drivers for the OEM in Saudi Arabia for Q1 2023.
Smartphone sales grew YoY across all price bands in Q1 2023 but declined QoQ largely due to seasonality. All price bands except the premium band (≥$600) lost share YoY as consumers moved up the price bands. But the premium band was the fastest-growing band in Q1, led by Apple and Samsung. Apple captured around 85% of the total premium smartphone sales in Q1. The mid-tier ($100-$249) remained the largest price band in Saudi Arabia, capturing nearly half of the total smartphone sales in Q1, with Samsung and Xiaomi taking the top spots in the price band. The lower (<$100) segment grew YoY but, like other non-premium segments, lost sales share during the same period, as customers continued to buy higher-ASP devices with improving affordability and rising aspirations.
Market outlook
We expect the ASP of smartphones sold in Saudi Arabia to continue to rise in 2023, as wage rates improve, financing options become more accessible, and customers move towards better devices. Currently, Apple and Samsung remain best equipped to capture more share of the aspirational Saudi Arabia smartphone market, but the quest for the #3 spot continues. While Xiaomi remains comfortably in the #3 spot, other Android OEMs have been mounting pressure with bolder promotions and marketing activities and aggressive launch strategies. Motorola, HONOR and Transsion Group brands Infinix and TECNO are likely candidates outside the top three to capture market growth.
Going forward, we expect the Saudi Arabia smartphone market to continue its growth momentum, with annual shipments likely to grow in low single digits in 2023. Increasing 5G use, ramping up of digitalization, greater access to financing options and growing aspirations of customers are expected to drive growth.
Note:
ASP & Priceband Analysis done using Wholesale Prices
Global handset revenues declined 2% YoY and 15% QoQ to $95.8 billion in Q2 2022.
Global handset operating profits grew 6% YoY to $13.1 billion in Q2 2022.
The top five handset makers contributed around 80% of the total revenue.
OPPO*, vivo and Xiaomi saw double-digit YoY declines in their revenues.
Samsung and Apple’s revenues grew 25% and 3% YoY respectively.
YoY growth in operating profit was also driven by Samsung and Apple while the other three of the top five brands saw significant double-digit declines.
London, New Delhi, Hong Kong, Seoul, Beijing, San Diego, Buenos Aires – September 28, 2022
Global handset market revenues declined for a second consecutive quarter, falling 2% YoY and 15% QoQ to $95.8 billion in Q2 2022, according to the latest research from Counterpoint’s Market Monitor service. A fall in global handset shipments due to factors including Chinese lockdowns and ongoing geopolitical uncertainty caused the revenues to decline despite the average selling price (ASP) going up by 6% in the same period. Consequently, the annual operating profit growth of 6% corresponded with ASP growth rather than shipment decline, reaching $13.1 billion in Q2 2022.
Commenting on the overall market dynamics, Senior Analyst Harmeet Singh Walia said, “Global handset revenues capitulated under the burden of continuing shipment declines. But with global brands such as Samsung and Apple leading overall ASP growth and even some Chinese brands such as Xiaomi, Lenovo Group, HONOR, Huawei and Transsion Group working towards a shift to higher ASP devices in the past year, overall operating profit saw annual growth in the second quarter of the year. It is, nevertheless, important to set this growth in context. While handset makers’ upward shifts in price bands enabled some of them to increase profit margins (with the notable exception of Xiaomi), much of the annual growth can be attributed to a smaller base in the COVID-battered Q2 2021 rather than to consistent growth in operating profits through the quarters. Compared with the previous quarter, operating profits declined 29% after declining 26% QoQ in Q1 2021.”
Given that handset revenues as well as profits are largely driven by Apple, as can be observed through the disparity in revenue and profit share in the chart above, we expect a growth in both the aspects in the second half of the year.
Associate Director Jan Stryjak said, “Revenue growth in the second half of the year, when compared to the first half, is a near certainty due to the cyclical launch of the highly profitable and relatively economic downturn-resistant iPhone. But with geopolitical uncertainty worsening, inflation levels rising and fears of recession growing, the handset market is bound to get impacted and may take longer to return to the trajectory predicted prior to the pandemic.”
*Note: OPPO includes OnePlus since Q3 2021
Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.
You can also visit our Data Section (updated quarterly) to view the smartphone market share for World, US, China and India.
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
New Delhi, Seoul, Hong Kong, Beijing, London, Buenos Aires, San Diego – August 24, 2022
Bangladesh’s smartphone market shipments declined 3% YoY in Q2 2022, according to the latest research from Counterpoint’s Market Monitor Service. The market declined due to soaring inflation and rising commodity prices, which resulted in a weakened consumer purchasing power for electronics. However, Bangladesh performed well as one of the most stable economies in South Asia.
Commenting on the brands in the market, Senior Analyst Karn Chauhan said, “In Q2 2022, Xiaomi captured the top spot for the first time in Bangladesh’s smartphone market with a share of 28.8% and 134% YoY growth. Xiaomi’s growing offline presence, well-developed local manufacturing facility and a wide entry-level portfolio with features like larger display size, huge battery capacity and improved camera helped it to reach the top spot. Eid festivities also helped Xiaomi drive significant volumes. Going forward, the brand will continue to focus on offline expansion and adding more features to the entry-level segment.”
“Samsung’s newly added budget smartphones and their steady performance in the entry- and mid-price levels took the brand to the second spot with a 17.3% market share and 65% YoY growth. Samsung’s active promotions and marketing helped it remain in the top three despite falling from its first position in Q1 2022. vivo took third place with a 10.1% share driven by its strong omni-channel presence and ability to target a range of entry- and mid-level price bands,” he added.
Commenting on the market dynamics, Chauhan said, “Bangladesh’s smartphone market experienced a good start with Eid celebrations during April. The month contributed almost half of the quarter’s total shipment volumes. However, the volumes declined adversely in May and June due to smartphone costs rising by up to 10% on increasing component prices and the addition of VAT. OEMs are expected to increase smartphone prices by up to another 20% in the coming months.”
Bangladesh’s feature phone shipments declined 12% YoY, mainly due to the shift towards smartphones, which resulted in a 9% YoY decline in the country’s overall mobile handset market in Q2 2022. Symphony continued to be at the top position in Bangladesh’s feature phone market in Q2 2022, capturing a 17% share followed by itel and Nokia HMD.
Market Summary
Smartphone shipment penetration increased in Q2 2022 to nearly 48% of the overall handset market, up from 45% in Q2 2021.
More than 80% of the smartphones shipped in Bangladesh have been manufactured locally since 2020. Bangladesh’s smartphone market is now a mature market in terms of local manufacturing. It has the capacity to produce more than 2 million smartphones per month. Locally-made smartphones’ penetration is expected to cross 95% by next year.
5G smartphone shipments grew 20% YoY in Q2 2022 to take their share to 13% of total shipments, up from 6% in Q2 2021. Nearly 80% of all 5G smartphones shipped in Q2 2022 came from the top five brands.
Top 10 smartphone models captured 44% of the smartphone market in Q2 2022. Xiaomi took four spots on the list. Its Redmi Note 11 was the best-selling smartphone in Q2 2022, followed by Samsung’s Galaxy A13.
During the start of Eid sales in April, Xiaomi offered attractive installment schemes to smartphone buyers at zero cost of interest. For the Eid sales in June, Samsung provided up to 50% cashback on its complete mobile phone portfolio, as well as exchange option and no-cost EMI for up to 24 months. Brands like OPPO and vivo targeted the online audience during the festive season by launching various campaigns on leading e-commerce websites like Daraz and Pickaboo.
Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
The global smartphone market declined by 9% YoY and 10% QoQ to 295 million units in Q2 2022.
This was the first time quarterly shipments dropped below 300 million units since Q2 2020 during the early part of the COVID-19 pandemic.
Samsung was the only top-five smartphone brand to grow YoY, increasing shipments by 8% YoY and growing market share by three percentage points to 21%.
Apple’s shipments declined by 5% YoY in Q2 2022, although its share increased in a diminished market.
Xiaomi, OPPO* and vivo, hit by China lockdowns, suffered double digit YoY declines in their respective shipments.
London, New Delhi, Hong Kong, Seoul, Beijing, San Diego, Buenos Aires – July 29, 2022
The global smartphone market took a further dip in Q2 2022, with shipments declining by 9% year-on-year to reach 294.5 million units, according to the latest research from Counterpoint’s Market Monitor service. Deteriorating economic conditions were exacerbated by ongoing geopolitical uncertainty caused by the war in Ukraine, weakening an industry that hadn’t yet fully recovered from the COVID-19 pandemic and chip shortages.
Commenting on the overall market dynamics, Associate Director Jan Stryjak said “the second quarter of 2022 proved challenging for the global smartphone market, with most vendors recording year-on-year shipment declines. Samsung was the only top-five vendor that managed to grow over the year, although this was largely due to Q2 2021 being a particularly poor quarter for Samsung thanks to COVID-related production issues, especially at its Vietnam factory. Nevertheless, Samsung retained the top spot, growing 8% year-on-year and gaining three percentage points of market share to 21%. Apple experienced a relatively small decline of 5% year-on-year due to macroeconomic headwinds, particularly in China. Shipments of Xiaomi, OPPO* and vivo, however, fell by 25%, 15% and 22% respectively.”
These top Chinese brands – facing lockdowns in China on top of a global economic slowdown – were hit particularly hard as the Chinese market fell to its lowest level in almost a decade. At the same time, they are being challenged more aggressively at home by a strengthened HONOR, while Huawei has also begun showing signs of recovery thanks to the trust that it still enjoys among Chinese smartphone users.
Senior Analyst Harmeet Singh Walia noted, “outside the top five, there was also a mixed bag of results. But the clear winner was HONOR, which became the sixth largest smartphone vendor globally (from eighth in Q2 2021) with year-on-year shipment growth of 79% in Q2 2022. This is primarily due to the re-establishment of the brand’s relationships with component players. Transsion Group’s brands TECNO and Infinix also posted shipment growth of 2% and 16% respectively over the year. Offering phones with enhanced design and improved specs paid dividends, as did their strategy to continue incentivising distributors while few other brands are doing so.”
Looking ahead, the challenges are likely to continue for the rest of the year. A pessimistic economic growth outlook with many countries on the brink of recession, ongoing and prolonged geopolitical uncertainty, rising commodity prices and weakening consumer demand for tech products are all impediments to the smartphone industry’s post-COVID recovery.
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech
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According to Counterpoint Research, Transsion’s smartphone sales volume grew 3% YoY in the first half of 2023 and 17% YoY in Q2 2023 as demand for TECNO 
Much of Transsion’s financial successes can be attributed to its continued commitment to entering new markets. In Q2 2023, Africa accounted for 57% of Transsion’s smartphone sales volume, a net drop of 8% from a year ago. Outside Africa, Transsion smartphone sales grew 35% in Q2 2023, most notably in Latin America, Eastern 
Saudi Arabia Smartphone Shipments by Top 5 OEMs for Q1 2021, Q1 2022, Q1 2023
Given that handset revenues as well as profits are largely driven by Apple, as can be observed through the disparity in revenue and profit share in the chart above, we expect a growth in both the aspects in the second half of the year.
