• Q1 2023 saw the lowest Q1 sales figure for China since 2014. However, the 5% fall marks an improvement from the double-digit YoY declines seen in previous quarters as the country emerges from COVID-19.
• Despite the market downturn, Apple reached its highest Q1 share and sales in years. iPhone 14 series prices have been reduced at some channels since February.
• On the other hand, sales of OEMs excluding Apple dropped 8% YoY as demand remained weak.
• vivo and OPPO were competing closely for the #1 Android OEM in Q1. OnePlus sales increased over 200% after a high-profile return to the Chinese market.
• Looking ahead, the YoY declines are expected to narrow in Q2 thanks to mid-to-high-end product launches and sales season promotions.

Beijing, New Delhi, Hong Kong, London, San Diego, Buenos Aires, Seoul – April 27, 2023

China’s smartphone sales fell 5% YoY in Q1 2023, reaching the lowest Q1 sales figure since 2014, according to Counterpoint’s Market Pulse Service. However, this was an improvement from the double-digit YoY declines seen in previous quarters as well as a sign of bottoming out. As the country emerged from the COVID-19 pandemic, Q1 sales increased by 10% QoQ.

The market saw a surge in sales in January during the Chinese New Year sales season due to the pent-up demand from the previous quarter and promotions offered by OEMs. However, sales momentum cooled down after the festive season, which also proved our prediction that consumers need more time to recover confidence. Though some premium Android models received support from customers, they were not enough to salvage the overall market downturn.

In Q1 2023, Apple recorded the biggest share in the China smartphone market, increasing sales by 6% YoY in a declining market. Apple’s market share in Q1 came to 19.9%, its highest Q1 share since 2014, while its sales were also the highest Q1 sales since 2015. Some retail channels cut prices of the iPhone 14 series by RMB 600-RMB 800 and some e-commerce websites offered additional RMB 800 subsidies. These moves quickly accelerated inventory turnover and helped Apple navigate the market downturn.

Sales of OEMs excluding Apple dropped 8% YoY, with major Android OEMs seeing YoY declines in the quarter as demand remained weak. Android OEMs were cautious in ramping up production. In terms of market share, OPPO and vivo were in a tie in Q1, with sales shares of 18.3% and 17.7%, respectively.

OnePlus’ fast growth in the China smartphone market after its high-profile return to the market was the spotlight of Q1. Its sales increased 227% YoY in Q1 with frequent and even aggressive launches of the OnePlus 11 and OnePlus Ace 2 and Ace 2V. These models sold well in the China online market where the value-for-money concept prevails. OPPO is sharing offline retail channel resources with OnePlus.

Source: Counterpoint Market Pulse Service Notes: OPPO includes OnePlus: Xiaomi includes Redmi; vivo includes iQOO; Figures may not add up to 100% due to rounding.

Huawei’s smartphone sales increased 41% YoY from a low base. Its mid-end Nova 10 series and premium Mate 50 series found popularity even though they still cannot support 5G. Huawei said that its product launch cycle had resumed to normal after US sanctions that were imposed more than three years ago.

With the eased pressure of smartphone manufacturing costs, OEMs have more room to improve specifications. For instance, we have seen OEMs offering bigger NAND and DRAM storage while keeping retail prices in check.

While the sales performance in the beginning of this year did brighten the mood, market players remain cautious about increasing production.

Despite this caution, we expect the market to further recover in Q2. China’s Q1 GDP increased by 4.5% YoY, beating expectations, while retail sales increased by 5.8%. These upbeat numbers suggest that the country's household demand is picking up.

Q2 should be a busy season for Android OEMs, with several champion series in the $300-$500 price band set to be released in the market. This band is also the sweet spot for Chinese Android OEMs. The 618 online shopping festival in June is an important window to observe the second half of the year and gain visibility on the market outlook.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Archie Zhang

Mengmeng Zhang

Ethan Qi