Samsung and Huawei dominate global 5G smartphones; Samsung expects sales to be down significantly due to COVID-19
Strategy Analytics reports that Samsung has become the leader of the 5G smartphone market, shipping 8.3 million handsets across the world during the first quarter of 2020 for a 34.4 percent market share. The South Korean conglomerate took advantage of its strong global distribution networks and operator partnerships and the popularity of its S20 5G and S20 Ultra 5G devices to top the ranking. Strategy Analytics stated that the biggest markets for 5G smartphones were China, South Korea, the U.S. and Europe.
Huawei was the #2 global smart phone vendor with a 33.2 percent market share after shipping 8.0 million 5G smartphones, nearly all in China. Note that Apple isn’t listed because the Cupertino, CA company has yet to announce a 5G smartphone.
The top 5 was rounded out by three other Chinese vendors – Vivo, Xiaomi and Oppo – with 12.0 percent, 10.4 percent and 5.0 percent of the global market, respectively.
Table 1: Global 5G Smartphone Vendor Shipments and Marketshare in Q1 2020
The Strategy Analytics report stated that worldwide shipments of 5G smartphones in the first quarter of 2020 came to 24.1 million, easily topping shipments of 18.7 million in 2019 as a whole. That’s despite the firm’s earlier forecast that global smartphone shipments would be down 25% in 2020.
Chinese smartphone vendors captured 61 percent of top 5 vendor 5G smartphone shipment volumes in Q1 2020, with the majority of those volumes going to the China 5G market. This reflects the speed with which Chinese operators have rolled out 5G networks, as well as the underlying demand for 5G smartphones, despite the Covid-19 pandemic that shut down large parts of China during the Q1 2020 period. As China continues to ramp up economic activity, Strategy Analytics expects 5G shipments to this market to continue to expand dramatically in 2020.
Samsung Electronics disagrees with that forecast as they warned in today’s earnings report that 5G infrastructure investments may face reductions or delays – both internationally and domestically – during the second quarter of 2020.
Sales and profits of set products business, including smartphones and TVs, are expected to decline significantly as COVID-19 affects demand and leads to store and plant closures globally.
In the second half, uncertainties driven by COVID-19 will persist as the duration and impact of the pandemic remain unknown. The Company plans to focus on optimizing resource allocation in the short term, while continuing to strengthen its technology leadership and develop innovative set products.
The Mobile Communications Business aims to strengthen its product lineup by introducing new premium models and expanding offerings of 5G models for the mass market. The Networks Business will focus on developing technologies and enhancing global competitiveness to reinforce the 5G business.
For the Consumer Electronics Division, under the risk of current economic uncertainties, the Company will closely monitor the market situation and will continue to focus on minimizing negative impacts by investing in efficient marketing and promotions tailored to each region and by optimizing its logistics.
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A shrinking smartphone market and store closures will lead to an “inevitable” drop in earnings for the current quarter, Jong min Lee, Samsung’s vice president of mobile, said along with other important items on Samsung Electronics earnings call.
In the first quarter, overall market demand drastically decreased quarter-on-quarter as a result of supply chain issues in China caused by the COVID-19 break — outbreak only in this quarter and travel restrictions in the last few weeks of the quarter following the global spread of the pandemic. As the impact of COVID-19, including those on logistics, began to take effect in March, our smartphone shipments also decreased quarter-on-quarter. However, we maintained sound profitability quarter-on-quarter by efficiently deploying marketing investment by improving overall product mix while increasing the sales portion of our premium and 5G model.
Now let me move on to the outlook for the second quarter. With the global spread of COVID-19, demand is expected to drop sharply in most regions due to the economic downturn caused by lockdown across the globe and a corresponding decline in consumer sentiment. As the market shrinks and effects of store closures continue to have direct impact, a drop in sales of our major products and overall performance seems inevitable. Although market uncertainty is higher than ever, we will focus on improving cost effectiveness and strengthening online and B2B channels. In case there are additional disruptions at our production sites, we will respond by effectively utilizing our diversified manufacturing capabilities around the globe. However, we are committed to protecting the health and safety of our employees as well as preventing community spread. We have been thoroughly implementing disinfections and prevention measures in our offices and production facilities in all regions.
For the network business, it is possible that investments in 5G networks will be reduced or delayed domestically and internationally as more effects of COVID-19 unfold.
Finally, I will share our outlook for the second half. In the midst of uncertainties such as the possibility of the prolonged pandemic and the timing of market recovery, we expect the competition to intensify further as companies try to recover from weakness in the first half. For the mobile business, while continuing to offer differentiation in the premium segment with new foldable and Note model launches, we plan to widen the range of choices for our customers and enhance competitiveness within each price range by introducing 5G models to our mass market lineup.
In addition, we will also improve operational efficiency across all areas, including R&D, production, supply, channel and marketing. For the network business, despite uncertainties around the 5G invest plan, we will continue to strengthen our technological competitiveness while improving our 5G business compatibilities globally for the mid- to long term. Thank you.
References:
Strategy Analytics: Global Smart Phone Market to Decline 25% in 2020
https://news.samsung.com/global/samsung-electronics-announces-first-quarter-2020-results
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Trump Extends Huawei Ban:
President Trump inked an extension to the US government’s ban on American companies’ business with China’s Huawei. The move essentially prevents US companies from doing business with Huawei through May 2021.
As Reuters reported, the action invokes the International Emergency Economic Powers Act, positioning China’s Huawei and ZTE as threats to national security. According to Reuters, the US Commerce Department is also preparing to extend the waivers it has provided to select US companies that will allow them to continue working with Huawei.
Hanging over the situation is the ongoing US-China trade war, a situation now further complicated by the COVID-19 pandemic that originated in China.
Trump’s action is noteworthy in light of a number of new developments, including reports that US companies may be given a green light to work with Huawei and other Chinese companies on 5G standards. And, separately, there are ongoing discussions about a government-funded program to pull Huawei equipment out of some US wireless operator networks and replace it with equipment from “trusted” suppliers.
https://www.lightreading.com/security/trump-extends-huawei-ban-to-may-2021/d/d-id/759625?
Robots work to fight COVID 19; SK Telecom’s 5G Robot
https://viodi.com/2020/05/27/covid-19-robots/
Due to the COVID-19 global pandemic, sales of mobile devices (smartphones and tablets) decreased across the board. Thanks for your accurate reporting of this topic.
You are spot on. That is why I am not purchasing a new 5G phone.