The consumer replacement cycle has become longer, and mobile phone manufacturers have been slashed

On April 19, the vivo folding screen mobile phone was photographed in the vivo Hangzhou flagship store. IC courtesy of the image

After the Qingming Festival, some media obtained news from the supply chain end, the tide of mobile phones emerged, and the annual shipments of major brands were reduced by 20% to 30%, of which the head manufacturer with the largest cutting range reached more than 30%, and was mainly concentrated in high-end models.

Recently, Loop Capital also released a report that Apple's iPhone production has once again decreased by 9 million units to 254 million units, and said that there will be more production cuts in the near future.

In this regard, Nandu reporter recently to the major domestic mobile phone brands to verify, although millet, vivo, glory, one plus, realme and other head manufacturers have denied the mobile phone "cutting orders", but according to the latest data of the China Academy of Information and Communications Technology, the Chinese market in February 2022 mobile phone shipments are only 14.864 million units, a year-on-year decline of 31.7%, which is the lowest value in more than a year. According to customs statistics, from January to February, the mainland exported 130 million mobile phones, down 20.6% year-on-year. In addition, the lady of the mobile phone retail end told Nandu reporter, "Since last year, mobile phone sales have indeed dropped by more than one-third." ”

Trend Force research shows that due to sales in the fourth quarter of 2021, the smartphone market in the first quarter of this year, in addition to adjusting the accumulated finished product inventory, was also affected by seasonal sluggish demand, resulting in a relatively weak production performance in the first quarter. Coupled with the impact of the Russian-Ukrainian war and the epidemic, inflation, chip shortages and other issues have brought more variables, which has weakened the production performance in the first half of 2022 as a whole, and it is not excluded that manufacturers continue to reduce the total production volume for the whole year.

Mobile phone head manufacturers deny "cutting orders"

Nandu reporter recently for the major domestic mobile phone brands related to the mobile phone "cutting orders" to verify, on this topic, manufacturers are a bit secretive. Xiaomi, Vivo and Glory all said in response to Nandu reporters that they "have not heard of this matter."

Some manufacturers said that they will expand production lines this year. OnePlus responded to reporters that the company is not currently cutting orders, "We are still pushing a new product line Ace series, compared with the previous expansion of the product line." Realme also said that this year the country will work hard in accordance with the 30% growth target.

During the interview, only OPPO responded, "The volatility of the mobile phone market in the first quarter is expected, and OPPO's market performance is in line with our expectations." "In the current market environment, they respect the laws of the market, take the initiative to adopt a pragmatic and slightly conservative inventory management method, cautiously and actively respond to the phased fluctuations of the market, and operate steadily to ensure the healthy operation of enterprises." We will continue to adhere to long-termism, including continuous efforts in innovative technologies and chips; we will continue to adhere to the boutique strategy to enhance the ultimate experience of users, while improving the competitiveness of products, services and channels."

"In fact, 2020 feels that the impact is not large, but the downward trend in sales is from the second half of last year, and the first half of this year has the greatest impact." Recently, Mr. Wang, who opened a mobile phone store in China Plaza, the largest offline mobile phone retail mall in Guangzhou, told Nandu reporters that since the end of last year, the turnover has dropped by more than one-third year year-on-year. For the future direction, Mr. Wang said that he will continue to wait and see.

In the first quarter of 2021, the domestic mobile phone market once rebounded strongly, with a total shipment of 97.973 million units, doubling year-on-year, and a total of 122 new models listed, an increase of 48.8% year-on-year, but since the second quarter of the same year, the recovery momentum of the mobile phone market has begun to turn downward.

According to the latest data from the China Academy of Information and Communications Technology, the Chinese market shipments in February 2022 were only 14.864 million units, down 31.7% year-on-year, the lowest value in more than a year. In the first two months of this year, mobile phone shipments in the Chinese market were 47.886 million units, an overall year-on-year decline of 22.6%, and 5G mobile phone shipments also rarely declined, down 11% year-on-year.

All parties predict that shipments will decline throughout the year

The "Operation of electronic information manufacturing industry in January and February 2022" issued by the Ministry of Industry and Information Technology also proves this trend. According to customs statistics, from January to February, the mainland exported 130 million mobile phones, down 20.6% year-on-year.

According to data from CINNO Research, a third-party market research organization, OPPO (excluding realme) sales in February this year were only 4 million units, down 45.7% year-on-year. Vivo (excluding iQOO) and Xiaomi also fell by 38.6% and 20% year-on-year, respectively, and Apple fell less, only 4%. Among the top five mobile phone manufacturers, only the same period last year has not fully returned to the glory of the market, achieving substantial year-on-year growth.

Insiders of mobile phone manufacturers who did not want to be named revealed that in the Chinese market from January to February 2022, only Apple and Glory achieved positive growth among large brands, especially the rapid growth rate of Honor offline. February was month-on-month compared to January, and the brands and the broader market maintained the same trend and fell by about 20%. From January to February 2022, large-cap sales fell by 4% year-on-year, sales volume fell by 8% year-on-year, while February fell 24% from January, March is expected to decline by 16% month-on-month and year-on-year, and is expected to decline by more than 10% year-on-year in the first quarter.

Market research firm IDC said on April 14 that due to the impact of the national phased epidemic, IDC will lower its forecast for China's terminal market for the whole year of 2022. IDC noted that China's end market is initially expected to ship 880 million units in 2022, a growth rate of 6%.

Wu Zhige, director of research at IDC China, believes that smartphone procurement plans have been delayed. In the first quarter of 2022, the domestic smartphone market shipped 75 million units, down 13.7% year-on-year. On the other hand, the uninterrupted epidemic has also led to less consumer mobility, and more consumers have delayed their purchase plans for products such as smartphones.

A few days ago, a number of supply chain executives also released such a signal. Liu Deyin, chairman of TSMC, told the media a few days ago that due to geopolitical uncertainty and the new crown epidemic, the demand for consumer electronics has shown signs of slowing, and the fields of smartphones, laptops and TVs have been affected.

In addition, Glory CEO Zhao Ming also said in an interview with Nandu reporters and other media a few days ago that this year is expected to have a certain decline in China's mobile phone market, the total amount will be reduced compared with last year, and the specific reduction depends on the impact of the entire epidemic situation.

The consumer changeover cycle is extended to 30 months

The insiders of the above-mentioned mobile phone manufacturers revealed to the Nandu reporter that this year's mobile phone market suffered a "cold winter", mainly for two reasons: one is the dislocation of the Spring Festival; the other is the impact of the economy, the epidemic, consumption and other general trends.

Not long ago, a news about the lengthening of the domestic consumer replacement cycle caused heated discussion. In the past few years, the replacement cycle of 18 months is the consensus of the industry, but the current domestic consumer replacement cycle has been extended to about 30 months. Many young people suppressed the impulse to change the machine and became Buddhist, "If the mobile phone can be used normally, why change it?" ”

According to TrendForce research, due to sales in the fourth quarter of 2021, the smartphone market in the first quarter of this year, in addition to adjusting the accumulated finished product inventory, was also affected by seasonal sluggish demand, resulting in a relatively weak production performance in the quarter.

Some industry insiders who did not want to be named previously analyzed to the Nandu reporter that in addition to the shortage of chips that led to price increases, which "dissuaded" some consumers, on the other hand, the current upgrade of mobile phone functions is lackluster, and the enthusiasm for consumers to change machines is not great.

In fact, it can be seen that since the second half of last year, mobile phone manufacturers have also noticed this and tried to make changes, and the newly launched products in addition to folding screen products, the price of other product lines is mostly lower than before.

The person in charge of the supply chain of some mobile phone manufacturers said that in fact, from the third and fourth quarters of 2021, price reduction has become the main theme of mobile phone manufacturers.

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The AB side of the chip supply and demand imbalance

In the past two years, all walks of life around the world have fallen into a "lack of core" crisis. In order to obtain a stable supply of goods, many manufacturers have adopted a strategy of "hoarding goods in advance".

However, at the beginning, manufacturers hoarded a large number of "chips", perhaps to cooperate with the high-end mobile phone strategy. According to the Canalys 2021 Smartphone Market Analysis Report, the average selling price of smartphones in 2021 will increase by 10% year-on-year. Relevant data also show that the average selling price of mobile phones in the Chinese market has increased to a price range of 2700 to 3000 yuan.

However, in the first half of this year, the high-end routes of major mobile phone manufacturers were frustrated, sales did not meet expectations, and began to refocus on the low-end market.

Tianfeng Securities analyst Guo Mingji recently said on social media that China's major Android mobile phone brands have cut orders by about 170 million units this year, accounting for 20% of the original 2022 shipment plan, and orders may be further reduced in the coming months.

MediaTek is the mobile phone supplier with the greatest impact on this round of cutting orders. Guo Mingxi said on social media that about 70% of the order cuts used MediaTek chips. According to CINNO Research data, MediaTek SoC (main chip) sales fell by 25% month-on-month and 10.2% year-on-year in February this year, second only to Huawei HiSilicon, which is sanctioned by the United States.

For the phenomenon of "cutting orders" in the supply chain, the person in charge of the supply chain of the mobile phone industry said that electronic materials such as chips and memory semiconductors are prepared according to a time cycle, such as a quarter, half a year or a year. "The material cost is relatively expensive and the production cycle is long. Generally, the production cycle of this material is 90 days, based on this, it is not how much the manufacturer wants to get as much as possible. In addition, the supply chain does not produce materials according to the manufacturer's plan, but according to the market. Now that the demand is reduced, the amplitude will be lowered, otherwise the volatility will cause the accumulation of goods. ”

The person in charge also revealed that in fact, since the third quarter of last year, mediatek and Qualcomm chips (main control chips) have begun to reduce prices, "recently Shenzhen Huaqiang North Qualcomm, MediaTek chips suddenly increased, but now no one wants it, the chip is now priceless and marketless."

"We found out last May that supply and demand issues in the supply chain would erupt. What is more serious now than last year is that in addition to the supply chain facing orders, there are also a large number of goods pressed in the channel that cannot be cashed out, and the problem is close at hand. The above-mentioned person in charge said that since last year, mobile phone manufacturers have successively cut orders, and the pressure on upstream supply chain manufacturers has risen. In order to eliminate panic, the supply chain will require mobile phone manufacturers to collect the bills in advance. In order to avoid a run and a quick payment, mobile phone manufacturers will sell mobile phone products at a reduced price and withdraw funds as soon as possible, otherwise it will cause a decline in cash flow. But now that terminal sales are declining, eventually the financial pressure will be transmitted to the upstream supply chain.

Some supply chain people said that because the material cost of electronic materials is relatively expensive and the production cycle is long, in order to protect their own interests, before manufacturing a batch of electronic materials, many supply chain manufacturers will buy insurance. Different materials correspond to different levels of premiums, and the more targeted insurance, the more expensive the premium. "In order to avoid mobile phone manufacturers cutting orders, the cost of material insurance for upstream supply chain manufacturers has now increased."

Written by: Nandu Wan Finance Agency reporter Kong Xueshao Tian Aili