·       In response to growing competition in emerging markets, Transsion significantly increased investment in high-end phones. Its R&D expenditure reached CNY 1.36 billion in H1, up 15% YoY.

·       Meanwhile, the company continues to expand into new product categories like electronics accessories, home appliances, internet services, and electric two- and three-wheelers. This diversification strategy aims to build up an integrated ecosystem and reduce reliance on its core handset business.

Transsion Holdings’ revenue in H1 2025 fell 15.86% YoY to CNY 29 billion due to delayed product launches and intensifying market competition. The company’s core handset business accounted for over 90% of its total revenue. To build up an integrated ecosystem and reduce reliance on handsets, Transsion has been expanding into new product categories like electronics accessories, home appliances, internet services, and two-wheeler and three-wheeler vehicles.

H1 revenue and gross margin fell YoY

Transsion: The company’s gross margin fell from 21.5% in H1 2024 to 20.1% in H1 2025 due to rising supply chain costs.

Analyst: Transsion has traditionally focused on the affordable handset segment, with phones priced below $150 accounting for more than 85% of its total shipments. These devices are sold at thin profit margins and are highly sensitive to cost fluctuations. The price rise of key components such as memory and storage squeezed the company’s gross margin. In response, Transsion introduced several mid-to-high-end phones in Q2 2025, which helped drive a recovery in both revenue and gross margin.

Smartphone shipments grew YoY in MEA, but fell YoY in all other regions

Transsion: The company holds a leading position in Africa and is also the market leader in some South Asian countries such as Pakistan and Bangladesh.

Analyst: The company has long dominated the MEA (Middle East and Africa) smartphone market, capturing a 29% share in H1 2025, underpinned by its particularly strong presence in Africa. Its longstanding strategy of offering value-for-money phones tailored to local preferences has not only driven its popularity across the region but also earned it the title “King of Africa”.

Despite growing competition from players like Samsung and Xiaomi, Transsion still achieved 8% YoY smartphone shipment growth in MEA in H1 2025. Given that the MEA smartphone market remains in a growth phase and Transsion has a first-mover advantage, we believe it still has growth potential in the region, at least in the short term.

However, the company faced YoY smartphone shipment declines in all other regions, including India, rest of Asia, Central and Eastern Europe, and Latin America, which dragged down its global shipments. Though Samsung has regained market share in some of these regions, the biggest pressure comes from Xiaomi, which has publicly stated its move to increase investment in Africa, and its product portfolio poses a direct challenge to Transsion.

R&D increase to bolster competitive position

Transsion: As emerging markets have greater growth potential, more and more OEMs are boosting investments in emerging markets to grab greater market share, leading to intensifying competition. Transsion will continue to ramp up investments in mid-to-high-end smartphones to solidify its market position and move up the value chain. The R&D expenditure reached CNY 1.36 billion in H1 2025, up 15% compared to the same period last year.

Analyst: Transsion has significantly increased its investments in mid-to-high-end phones, with a particular focus on AI-related features tailored for local needs. It recently launched models such as the TECNO Camon 40 series, which has integrated DeepSeek to deliver intelligent functions such as real-time call translation, web content summary, text writing, and photo editing. For OS and mobile internet services, it launched TECNO AI and voice assistant Ella and is exploring large models and cross-device connectivity.

Though Transsion has made progress in improving its product mix, its premiumization journey remains challenging amid intensifying competition and ongoing economic headwinds. Transsion’s R&D spending accounted for less than 5% of its total revenue, lagging behind competitors like Xiaomi. Furthermore, it is still in a catch-up phase in terms of building a meaningful presence in the mid-to-high-end smartphone segment.

Pursuing growth through business diversification

Transsion: In addition to the handset business, the company continues to intensify efforts in diversifying its product categories like electronics accessories, home appliances and internet services.

Analyst: In order to reduce its reliance on core handset operations, Transsion has been expanding into new product categories, including an entry into electric two- and three-wheelers. An integrated business ecosystem spanning handsets, mobile internet services, home appliances, and electronics accessories is slowly taking shape. Although these new businesses have generated relatively low revenue so far, they demonstrate strong growth potential. By leveraging its well-established handset distribution network, extensive customer base and deep knowledge of local markets, the company is well-positioned to cultivate these businesses into meaningful growth drivers in the coming years. Nevertheless, scaling these businesses also requires enhanced capabilities in managing complex, multi-tier supply chains.