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Is Smartphone Production on the Decline?

Is Smartphone Production on the Decline?

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In 2017 the Smartphone market rose to dazzling heights, with a staggering increase of 6.5% in production growth. This growth amounted to 1.46 billion devices up from 2016. 2017’s smartphone production growth was attributed to a few factors namely: the activity of the Chinese smartphone manufacturers as well as certain leaps in iPhone technological innovations.

Chinese manufacturers were able to significantly boost the smartphone market in 2017 as they subsidized 4G monthly fees and actively marketed and sold their products in immerging markets such as India and Indonesia. For example, Xiaomi saw a 76% increase in smartphone production due to their involvement in these emerging markets as well as their active attempts to make their devices more physically accessible. According to TrendForce, these Chinese brands will experience continual growth in the coming year.

While the statistics from last year are favorable, the same cannot be said for 2018. Here TrendForce is predicting that smartphone production growth will slow down and possibly even plateau at 5%. This drop in growth is thought to impact mainly Samsung and the Chinese smartphone brands. The main cause of this being, a steady rise in production costs. 2018 will see key components in smartphone production bumped up in price, therefore placing pressure on the smartphone giants.

While Samsung is currently the market leader, 2018 will see its old competitor iPhone take the lead. This will obviously mostly be in the high-end market but, in accordance with market, demands iPhone will be releasing a smartphone in 2018 which will target mid-range users. The giant will also be continuing its improvements in Face ID, memory capacity, and screen to body ratio. These are predicted to bring about a growth of approximately 7.5% in 2018, which is considerably better than the predicted 3% drop that Samsung may experience.

All is not lost for the Chinese manufacturers though. While the market for smartphones in China is growing increasingly more saturated, the emerging markets are ripe for the picking. The huge growth of smartphone production in 2017 in China was mainly since it was matched by an equally large domestic demand. This coupling of trends cannot continue indefinitely. To maintain their growth, start-ups and existing Chinese brands, such as OPPO and Vivo, would do well to follow the leads of Xiaomi and Transsion and focus their efforts outside of China.

Trend Force’s predictions may be unsettling to shareholders but, the same is not true for smartphone users. 2018 will see advances such as 18:9 all-screen, dual camera, wide-angle front camera and AI embedded applications as a standard for smartphones. This is due to the collective, continual push of all smartphone manufacturers to enhance the overall experience of the users of their products.

When it comes to biometric recognition other brands will attempt to keep pace with iPhone’s Face ID by utilizing capacitive fingerprint sensors. As technological barriers still exist, this will be for the first six months of 2018 while the last half of the year will see an overall increase in devices running with under-display fingerprint or 3D sensing.

In the face of this decline in global smartphone production, one might lose confidence in the market itself. This would be premature. While technological barriers are present, the race between manufacturers continues. Each continues to strive to gain even more of the market share by making their products not only more desirable but also more accessible. iPhone will not continue to be a product only for the high-end users, while brands operating with Android OS persevere in their attempts to advance their technology.

The Chinese manufacturers are worth noting here, as their continual growth could herald a new age for the smartphone market. It is safe to say that 2018 holds interesting times for those keeping an eye on the industry. If not only to watch the giants battle it out but also to be witness to the next leap in smartphone technology.

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