[SMM Analysis] domestic mobile phone shipments fell by 20% in the first quarter. Consumption recovery is expected to lead to a month-on-month recovery of the mobile phone battery industry.

SMM5, June 9: mobile phones, as the most popular consumer goods nowadays, and as an important foundation of the online economy, have had a profound impact on economic development. In recent years, China's communications industry has developed rapidly, the scale of mobile phone users has increased, and the penetration rate of mobile phones has increased. In 2015, there were only 1.306 billion mobile phone users, with a mobile phone penetration rate of 95.5 per 100 people. By 2019, the number of mobile phone users in China has exceeded 1.6 billion, and the mobile phone penetration rate is 114.7 per 100 people. With the development of economy and the improvement of consumption level, the update speed of mobile phone is accelerated, and the frequency of consumers updating new mobile phone is also increasing.

Under the impact of the new crown epidemic, the domestic consumer market was greatly affected in February and March. The growth rate of GDP in the first quarter was rarely negative. As an important means of stimulating economic development, consumption fell into stagnation for a while, seriously dragging down the development of industry.

Shipments in China's smartphone market were about 66.6 million units in the first quarter of 2020, down 20.3 per cent from a year earlier, according to a quarterly mobile phone tracking report released by IDC, an international data company. In 2019, China shipped about 88 million mobile phones in the first quarter.

Shipments of mobile phone brands such as Huawei, vivo, OPPO, Xiaomi and Apple all fell to varying degrees in the first quarter. Among them, Huawei mobile phone shipments fell the smallest, 4.4%, shipments of 28.4 million units.

Xiaomi fell the most, down 33.8% from a year earlier, with a total of 7 million shipments. Although Xiaomi's mobile phones performed better online, the competition in reality did not become mild or even more intense because of more online channels. According to statistics, Xiaomi series (including red rice) accounted for 9.74% of sales in the first quarter, ranking at the bottom level, including sales. By March, Xiaomi accounted for 9.79% of sales, still the bottom of the top five, and sales also continued to decline. Vivo and OPPO fell by 24.5 per cent and 15.8 per cent, respectively.

Apple was down 12.2% from a year earlier. Earlier, out of concern about the epidemic in Wuhan, Apple announced that all its retail stores in mainland China would be closed by February 9, and online stores would remain open to users. The most immediate manifestation of Apple's temporary closure in February was a sharp drop in its share price as a result of falling sales expectations, and Apple reopened all its stores in mainland China in early March after the outbreak was brought under control.

At present, although the epidemic has had a certain impact on mobile phone consumption, but with the arrival of the 5G era, 5G mobile phone consumption will still promote the domestic mobile phone consumption market is on the rise. According to IDC data, Huawei still accounts for more than half of the 5G market share. With many head manufacturers for various price segments, different product positioning 5G mobile phones have entered the market, the competition between each other is becoming increasingly fierce.

14.5 million units were shipped in the first quarter of 2020, accounting for 21.8 per cent of the overall market. At the same time, the average unit price of 5G phones is also falling rapidly. In the 5G market, Huawei still accounts for more than half of the domestic market. IDC expects 5G handsets to account for more than 40 per cent of shipments by the end of the second quarter of this year.

As China's economic development gradually enters the recovery stage in March, the consumer market is activated, and the previously suppressed consumer demand will also be released.

Overall, driven by the month-on-month increase in 5G mobile phone shipments, the domestic mobile phone market performed better than expected in the first quarter of 2020. We can see some delayed demand release in January and February in March. Domestic services, retail and other consumer industries are gradually warming in the second quarter, some mobile phone manufacturers launched new products in April, experienced a wave of small peak procurement, and returned to a relatively normal level from May to June. Under the influence of the overseas epidemic, the impact of international trade is still relatively large, and domestic consumer demand has not returned to the normal level, and the epidemic has affected changes in the consumption habits of individuals and enterprises. Mobile phone shipments and demand for lithium cobalt acid batteries and lithium cobalt acid batteries in the second quarter of this year are expected to increase month-on-month compared with the first quarter, and may still decline in the second quarter of 2019 compared with the second quarter of 2019.

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