Overview:

• Global smartphone sell-through declined (YoY); shortages across supply chains dragging down production.
  • Global smartphone sell-through declined (9% YoY) in October as key markets decline. However, the sell-through improved 5% month over month driven by Apple.
  • Sell-in was robust until September, but shortages across the supply chain were dragging down production and sell-in in October.
  • This helped contain inventory levels though and it prevented brands like Xiaomi, realme and Oppo overshooting.
  • Mediatek 4G chipsets are desperately needed but nowhere to be found after Huawei absorbed huge amounts of chipsets prior to its mid-September deadline.
• Key Markets - China, US and EU drove the Global YoY sales decline
  • China’s smartphone market continued to decline steeply (-22% YoY) in October. There are several factors driving this. The negative macroeconomic environment has left consumers with lower disposable income. In addition, the increasing ASP of smartphones have lengthened the replacement cycles. While Huawei is scaling down fast in the region, other brands aren’t moving fast enough to fill the gap; there is some patriotic sympathy towards Huawei.
  • Consumers in Europe are also treading cautiously as renewed lockdowns were anticipated amid rising cases. The late launch of iPhone has also effected key markets like that of US and Europe; iPhone 12 was only available in late October.
  • India also remained flat, as festive season (Diwali) is in November this year; in 2019 it fell in October.
• Premium segment rebounds driven by Apple
  • The premium segment gained in October driven by Apple iPhone 12 series and the Samsung Galaxy Note 20 Ultra 5G.
  • We expect the $600+ price band to increase through the quarter. The iPhone 12 Pro Max launch in November will further increase the volumes in the ultra premium segment.
  • Overall, iPhone 12 is likely to remain the volume driver for Apple through the quarter.
  • The iPhone upgrades in the upcoming months will also push volumes of older iPhone in the refurb segment. The secondary market was also hit by COVID, and the iPhone upgrade season will help offset some of the decline.

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