AI empowers consumer electronics

The smartphones latest production

■In Q2, global smartphone production around 6.6% decline continually

The latest data from research shows that following the nearly 20% year-on-year decrease in global smartphone production in the first quarter (Q1), Q2 production continued to decline by approximately 6.6% to only 270 million units. In the first half of 2023, smartphone production totaled 520 million units, a decrease of 13.3% compared to the same period last year. Both individual quarters and the first half of the year in total set a ten-year low record.

There are three reasons for the sluggish performance of smartphone production.

1. the performance in the post-epidemic period is not as expected to drive demand;

2. brand manufacturers will be severely dragged down by excessive channel inventory in 2022. They originally expected to restore production levels as inventory is reduced, but Nowadays, affected by the weak economy, downstream consumption willingness is more conservative;

3. the demographic dividend effect of the emerging Indian market has not effectively exerted its advantages. This ultimately resulted in H1 production not performing as expected.

■ Transsion squeezes Vivo into the top five in the world, Apple and Samsung compete for market leadership this year

Transsion surpassed Vivo and entered the fifth place in the world for the first time. Its output increased by more than 70% month-on-month to 25.1 million units. Transsion has benefited from channel inventory replenishment, new product launches, and entry into the mid-to-high-end market. It has had good production performance since March. It is expected that this wave of growth will continue into Q3. Vivo, on the other hand, planned its production conservatively due to the economic downturn. Q2 production was 23 million units, an increase of 15% from the previous quarter, and it fell to sixth place in the world.

Samsung retained its top spot in the production rankings. Affected by competitors and global economic headwinds, as well as the fading halo of Samsung's flagship phone sales in the first half of the year, the total number of Q2 production was 53.9 million units, a decrease of 12.4% from the previous quarter. Even though a new foldable phone will be released in Q3, sales The scale is smaller than that of the Galaxy S series, and its contribution to overall output growth is limited.

Apple's new and old models alternate. Q2 was the lowest production performance among the four quarters, with output of 42 million units, a 21.2% decrease from the previous quarter. The Q3 new model iPhone 15/15 Plus will have an impact on the production performance of the quarter due to poor CIS (CMOS Image Sensor) yield. If the iPhone 15 series performs better than market expectations, it may overtake Samsung to become the number one brand in the world in 2023.

Xiaomi benefited from the gradual decline in channel inventory and the launch of new machines. Its Q2 output was approximately 35 million units, an increase of 32.1% from the previous quarter. Compared with other brands, Xiaomi's channel inventory is still high, and its Q3 production plan should remain at the same level as Q2.

Oppo benefited from the rebound in demand in Southeast Asia and other places, and its Q2 output was approximately 33.6 million units, an increase of 25.4% from the previous quarter. Q3 will be driven by seasonal demand, and output is expected to increase by another 10-15% quarterly.

■ The economy has not recovered, and smartphone production is likely to be revised downwards in the second half of the year.

In the second half of the year, consumer market demand in regions such as Europe and the United States has not yet recovered significantly, and improved economic indicators in the Indian market cannot reverse the decline in global smartphone production. TrendForce estimates that the smartphone market in Q4 this year may undergo another wave of changes due to global economic conditions, and production in the second half of the year may be revised downwards again.

AI empowers consumer electronics

■ The consumer electronics market is experiencing a "cold winter" and terminal manufacturers are under heavy inventory pressure

As the main force in the consumer electronics market, smartphones have not yet reversed their situation. As the economy has not yet recovered, TrendForce estimates that global smartphone production will increase by 2-3% annually this year, and it remains to be seen whether regional economic trends will further drag down production performance.

Since the second half of 2022, the consumer electronics industry has begun to decline. Affected by the downturn in the global economic situation, geopolitics and other factors, downstream demand continues to be sluggish, which has troubled many semiconductor manufacturers. The low-level shipments of consumer electronics have kept major terminal manufacturers in a state of destocking, with more than half of the inventory in 2023, while the output of smartphone H1 dropped 13.3% compared with the same period last year; according to DIGITIMES data, Q2 global smartphone shipments The sales volume was 257 million units, a year-on-year decrease of 6.4%. Sluggish downstream demand has also caused semiconductor sales to slump, and high semiconductor inventories cannot be released in a short time.

■ The AI wave continues to drive recovery in demand for components

The new industry trend that will emerge in 2023 is generative artificial intelligence (AIGC), which puts forward higher hardware computing power and data bandwidth requirements for CPUs, GPUs, AI-specific integrated circuits, etc.

AI applications involve various fields such as autonomous driving, finance, healthcare, office, and security. With the continuous improvement of large-scale model regulatory policies, the time for large-scale commercialization is gradually approaching. AI technology empowers various hardware devices and smart terminals. Stimulated by the market demand for high computing power algorithms, AI servers have grown rapidly, and AI servers have increasingly higher demands and specifications for high-end components.

At the same time, AI application scenarios will gradually extend to mobile phones, smart homes, AR/VR/MR wearables, robots and other smart terminals, which is expected to drive a recovery in consumer electronics demand.

■ AI is expected to empower consumer electronics and bring new demand for replacement devices

Gartner analysts predict that in the consumer electronics market, the value of AI-enabled application processors will reach $1.2 billion by the end of 2023, up from $558 million in 2022. In addition to looking forward to the early recovery of the economy, mobile phone and computer manufacturers are currently vigorously developing AI applications, which are expected to be gradually implemented. AI technology can inject new vitality into the consumer electronics industry chain, and new scenarios and applications are expected to drive downstream consumer demand, boost terminal shipments, and revive the semiconductor industry.