Growth of smartphones drops to 5.8 percent per year

THE global smartphone shipments for 2016 will only show a 5.8 percent annual growth, sitting at 1.34 billion units, claims TrendForce..

This represents a decline in annual growth, down from the 8.3 percent growth between 2015 and 2014.

According to TrendForce, 2015 marks the end of the smartphone boom that began with the launch of the iPhone in 2007. As the industry enters a plateau period, growth rates will be a far call from the past, when shipment increases were upwards of 30 percent.

The sales of iPhone 6 and 6 Plus stayed hot throughout the first half of 2015, unaffected by seasonality influences. As a result, Apple will see its annual iPhone shipment growth close to 16 percent in 2015, totaling 223 million units.

However, the recently launched iPhone 6S focuses only on hardware upgrades and is similar to the previous generation iPhone models in appearance.

Furthermore, several rival brands have released their latest models ahead of the next iPhone's launch in September. Samsung deliberately launched Galaxy Note 5 earlier, and so did Huawei with its Mate S featuring Force Touch and Sony with its Xperia Z5 Premium, which is the first smartphone with a 4K display.

These competing devices and the next iPhone's lack of fresh looks will have a tangible impact on iPhone sales next year. In sum, Apple is also moving into a plateau growth period, and TrendForce expects the vendor to see its first ever single-digit iPhone shipment growth in 2016 at about 7.5 percent.

Meanwhile, increasingly competitive Chinese brands will phase out some weaker players. While the projected global smartphone shipment growth for 2016 is reduced to a low 5.8 percent, TrendForce expects Chinese brands will be able to maintain shipment increases of at least 10 percent annually next year, with their combined shipments totaling around 576 million units.

For the second quarter of 2015, TrendForce found that 7 out of the top 10 global smartphone vendors are Chinese, and they are gaining grounds steadily over other global brands like Microsoft, Sony and HTC.

However, because at least 80 percent of components for Chinese branded smartphones are sourced from foreign suppliers, the Chinese government has been encouraging the domestic smartphone industry to transform its role from manufacturing to independent R&D. The expectation is that Chinese companies eventually will be participating in the configuration and standardisation of smartphone specs.

The Chinese government has furthermore targeted DRAM production for strategic investments as it aspires to create domestic rivals to South Korean and U.S. companies that can develop DRAM components in house.

Source: Growth of smartphones drops to 5.8 percent per year