Smartphone Shipments Edge Up in May

*Smartphone shipments grew by 2% year-on-year in May, the first monthly year-on-year increase since February 2017 

*The number of new models released was down 45% year-on-year to 53

(Beijing) — China saw its smartphone shipments rise slightly in May, after the world’s largest smartphone market contracted for the first time in 2017, ending eight years of expansion.

Shipments reached 36 million units in May, inching up nearly 2% year-on-year, according to a report released Friday by the China Academy of Information and Communications Technology, a research arm of the country’s telecom regulator.

This marginal increase comes despite a year-on-year decrease in the number of models released in May, down 45% from 2017 to 53.

For the first five months of the year, smartphone shipments totaled 150.5 million units, down 19% year-on-year, and the number of new releases dropped 32% to 254.

The last month in which there was a year-on-year increase in smartphone shipments was February 2017, when shipments were up 33% to 29.6 million units.

China has produced a bumper crop of manufacturers, and three of the world’s top five brands are now based in the country. But the explosion of local manufacturers, many making similar low-cost models, has led to intense competition and pushed many companies into the red.

The country sold 4% fewer smartphones last year compared to 2016, the first contraction since 2009, according to Canalys. The research firm said replacement demand has dropped as people traded up for more-affordable entry-level smartphones from basic cellphones in recent years.

Entry-level smartphones have enough features to push their life cycles up to 26.8 months, according to Canalys.

Preliminary data from market researcher International Data Corp. (IDC) meanwhile shows that China’s smartphone shipments dipped below 100 million units in the three months ending March, the first drop since the third quarter of 2013.

“Globally, as well as in China, a key bellwether, smartphone consumers are trading up to more premium devices, but there are no longer as many new smartphone converts, resulting in shipments dropping," said IDC analyst Melissa Chau in the report in May.

IDC said “tough times are expected to continue in 2018” as it forecasts consumption in China will decline another 7% before flattening out in 2019.

Canalys said it didn’t see the Chinese smartphone market growing significantly until devices using the fifth-generation telecom technology hit the scene in late 2019.

Contact reporter Jason Tan (jasontan@caixin.com)