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Smartphone production to plateau in 2018, says report

After a bumper year, driven chiefly by growth in the Chinese market, smartphone production will begin to slow in 2018, according to analysts at TrendForce

Global smartphone production is set to slow this year as the industry faces saturation in high-growth markets and rising component costs, according to research from Taiwan-based analysts TrendForce.

While around 1.46 billion units were produced in 2017, an increase of 6.5% year-on-year, production this year will grow by only 5% to around 1.53 billion units, said the report.

Last year’s strong momentum was driven chiefly by heavy subsidies in 4G monthly fees given to users by Chinese mobile network operators (MNOs). However, this growth will prove unsustainable in 2018, said TrendForce, and the days of double-digit growth in unit production are probably long gone.

“Chinese smartphone brands have gained remarkable expansion in past years because of strong domestic consumption,” said the report.

“But as the penetration rate of smartphone goes saturated in China’s existing market, both existing brands and startups turn to emerging overseas market and overseas telecommunication operators to keep their market shares.”

Chinese suppliers, particularly Xiaomi and Transsion, will likely look to countries such as India and Indonesia, while their competitors Oppo and Vivo, which have adopted domestic market-driven strategies, will probably see production drop by at least 10%.

In contrast to the stagnating Chinese brands, Apple is likely to see some improvement in their fortunes in 2018, said TrendForce, with the influence of innovative applications on Apple’s latest iPhone X models and planned flagship models making it likely Apple will see production growth of more than 7% this year, compared with 3% in 2017.

The picture for Samsung, Apple’s biggest rival, looks less appealing. According to TrendForce, the Korean manufacturer will see a 3% drop in production volume as it faces pressure from Apple in the high-end market, and Chinese brands running Android phones on mid- to low-end devices.

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In terms of device features and capabilities, development this year will be focused on enhanced user experiences, such as 18:9 all-screens, dual-cameras, wide-angle front cameras and even some early embedded artificial intelligence (AI) apps.

Biometric face identification will likely remain restricted to iPhones due to technical barriers, although towards the end of 2018 models with under-display fingerprint or 3D sensing may begin to enter mass production.

Read more on Smartphone technology

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