Braving the COVID-19 pandemic, Japan’s smartphone shipments grew 27% YoY to 19.7 million units in H1 2021, according to the latest numbers from Counterpoint Research. When compared with the pre-pandemic period of H1 2019, the shipments in H1 2021 saw an increase of 16%. Clearly, the market saw more growth in H1 2021 than that triggered by any pent-up demand. This additional growth can be attributed to the demand coming from consumers looking to replace their 4G handsets with the 5G ones.

In H1 2021, 5G smartphones accounted for 43.2% of Japan’s total smartphone sales, compared to 26.3% in H2 2020. However, there is a difference between the price segments that drove the 5G smartphone growth during the aforementioned periods. In H2 2020, it was Apple that led the surge in 5G sales with its newly launched 5G capable iPhone 12 series. Apple maintains a smartphone market share of nearly 50% in Japan. But in H1 2021, the situation changed subtly. Even as the iPhone 12 series continued to hold strong, the rapid growth of low- and mid-end 5G smartphones played a more critical role in the overall growth of 5G smartphone sales. Therefore, 5G smartphones are now showing good penetration in all segments of the Japanese smartphone market.

Smartphone Market Shipments and 5G Smartphone Penetration in Japan, 2019-2021

In H1 2021, low-end 5G smartphones in the $250 and below segment recorded an astounding 40% share of the overall Japanese 5G smartphone market, thus playing a stellar role in expanding the 5G market. On the other hand, the iPhone 12 series led the 5G smartphone market in the $400 and above segment. Moreover, in the $400-$799 segment, Google, Sony and Samsung 5G smartphones also performed well.

Intensifying competition among OEMs in the low-end 5G smartphone segment seems to have led to a surge in sales of these phones in Japan. In Q1 2021, many low-end 5G smartphone models were brought to the Japanese market by Chinese manufacturers such as Xiaomi and OPPO. Existing players such as Samsung and Sharp responded to this by quickly launching cost-effective 5G models. Major Japanese telecommunication companies also acted as a growth driver, significantly lowering 5G service prices.

Going forward, premium segment players Apple, Sony and Samsung are expected to target the affordable premium market ($400 and above) along with the $800 and above segment. The low- to mid-end smartphone market is also expected to grow further in the second half. In this segment, competition between Japanese and Chinese brands is expected to intensify. Samsung is likely to target all price bands with its wide portfolio, ranging from the A series to foldable smartphones.

Japan 5G Smartphone Sales Volume by Price Band, 2020-2021

Highlights by OEM

• Apple’s iPhone SE 2020 performed well in H1 2021, becoming the best-selling model in Japan during the period. The iPhone 12 series recorded a market share of 62% in the premium segment. Apple is likely to lead the Japanese market in H2 2021 by launching the iPhone 13 series.
• Sharp is expected to focus on the low- to mid-end segment. Along with the sales of its LTE-based models, the share of its 5G smartphones is also expected to increase in the low- to mid-end segment.
• Samsung rose to third place in the Japanese smartphone market in H1 2021, thanks to the robust performance of mid-priced models in the $250-$399 band. In H2, besides the low- to mid-end segments, Samsung is also expected to focus on penetrating the high-end market with its foldables and the Galaxy Note FE 5G.
• Xiaomi and OPPO performed well in the low-end segment in H1 2021 for both LTE and 5G models. The two OEMs are expected to continue their aggressive moves by launching low- to mid-end models in the second half.