Thailand Smartphone Market to Decline Amidst COVID-19 Pandemic: Present Scenario and Outlook

Thailand smartphone market sales declined 8% YoY in CY 2019 and we believe it will continue to decline in CY 2020 amidst Coronavirus (COVID-19) pandemic. Samsung is leading the Thailand smartphone market with a 31% market share in CY 2019 driven by its wide device portfolio that caters to the requirements and needs of all income groups. The refreshed Galaxy A series has further helped Samsung strengthen its portfolio and grow 6% YoY.

Apart from Samsung, Chinese OEMs have gained popularity in the market. They are aggressively expanding outside China and Thailand is an attractive market for them as the smartphone users there look for “value for money”. Good specs at competitive pricing give Chinese OEMs an edge over other OEMs and will likely help Chinese players grow further. For the same reason, we believe the runner up Oppo and Samsung to be in tough competition for the top spot.

Thailand smartphone market: CY 2018 vs. CY 2019

Reasons for the decline (in decreasing order of their importance) in Thailand smartphone market:

  1. Thailand’s smartphone market has reached saturation. DTAC’s subscriber count declined 2% YoY in 2019 and other major operators remained almost flat in terms of subscriber count.
  2. Thailand’s GDP growth slowed to 2.4% in 2019 compared to 4.1% in 2018.
  3. The Thai general elections of 2019 which gave no party an absolute majority added to the economic instability.
  4. The replacement cycle elongated because people tend to use their present smartphones for longer and are waiting for a 5G smartphone as their next buy. Also, as an immediate impact of the coronavirus pandemic, the replacement cycle is likely to stretch still further.
  5. The decline was further triggered by a drop in Huawei sales due to a lack of GMS services in their devices following the imposition of trade sanctions by the US. However, Samsung and Oppo partly monetized on this opportunity to grow.

COVID-19 Impact

The new coronavirus pandemic will have an impact on market performance in Thailand. In 2020, the pandemic will adversely impact Thailand’s tourism which will further impact the Thai economy. This will feed through to lower disposable incomes. The decline in disposable income will have an indirect negative effect on Thailand’s smartphone market, likely by further extending replacement cycles, causing people to buy cheaper products or opt for second hand or refurbished handsets.

Assuming the Thai authorities can continue to keep the spread of the virus under control locally,  the most likely scenario is for the Thailand smartphone market to be flat to slightly down in 2020.  Recent 5G auctions and sales of 5G phones in 2020 can help the market to recover more quickly later in 2020 and into 2021.

Quick scenario wise analysis:

  1. Optimistic: Pandemic bought under control in Q1- Thailand market to grow 1-2% YoY in 2020 driven by 5G and strong performance from Samsung, Oppo, and Vivo.
  2. Most Likely (Base Case):  Pandemic bought within control in Q2- Market to decline 1-1.5% in 2020 driven by 5G and strong performance from Samsung and moderate performance from Oppo and Vivo.
  3. Pessimistic: Pandemic continues into Q2,  possibly even into Q3- Market to decline 4-5% YoY driven by a weak performance from Chinese OEMs.

Certainly, this viral outbreak will have an impact on the production and shipment of vendors globally. Though China is starting to get back to normalcy, the vendors who have their component manufacturers and supply chain in the country will be impacted. We believe their shipments will take a loss for the first quarter of 2020. Hence, we believe Samsung who relies on India, Vietnam and South Korea for component manufacturing and assembly will be at an advantage for the first quarter. However, the market will rebound post the period of crisis with a little change in demand patterns and therefore the Chinese brands will bounce back strong giving a tough fight to the Korean giant.