Consumer Electronics

Huawei Expected to Top Apple in Global Smartphone Sales

Chinese smartphone company Huawei is expected to take the number two spot in global smartphone shipments away from Apple Inc. (NASDAQ: AAPL) in the third quarter, as overall industry shipments are forecast to be 6% over the second quarter of the year to 373 million units. Samsung is expected to keep first place for the period. The forecasts are from research firm TrendForce.

Samsung is expected to post a market share of 19% for the third quarter. Huawei’s is expected to be 12.5% and Apple’s 11.5%. The balance of the top-selling manufacturers shows the rise of Chinese companies. Xiaomi’s share of the market is expected to be 9.9%, followed by Oppo at 9.2% and Vivo at 7.3%.

According to TrendForce management:

Faced with intensified competition, Chinese smartphone brands have been growing rapidly driven by their active exploration of new markets, simplified sales channels, and adoption of both online and offline sales modes. Most importantly, their flexible pricing strategies focus on a high performance-price ratio, as well as a wide range of products and prices, which enable Chinese smartphone brands to succeed in new markets. For the whole year, these Chinese brands are expected to achieve a combined share of 54% in the global market. However, the overemphasis on high performance-price ratio has been squeezing the profits for these brands. Consequently, some brands would be forced to exit from the market faster due to the pressure from cash flow.

Global unit shipments will rise for three quarters in a row, according to TrendForce: 341.7 million in the first quarter, 352.1 million in the second quarter and 373.3 million as the year-end holiday period approaches.

Apple continues to have a critical advantage, which is its smartphone profits. Analysts believe that nearly 90% of the industry’s profits belong to Apple.

Chinese manufacturers may elbow into some of the world’s largest markets. However, that does not mean they will make money. Apple’s move to the third place as measured by global shipments may not mean much to the company. It owns profitability across the industry.