Much has been said about the impact of Covid-19 lockdowns on smartphone supply chains, sales and revenues. Q3 2020 results show overall revenue growth for OEMs and an anticipation of a 5G upgrade cycle as they prepare for a second lockdown across Europe.

Europe is now in the midst of an accelerating second wave of Covid-19 infections and a new lockdown. The UK, France and Germany have announced new national lockdowns. Other countries are expected to follow as the number of cases continues to rise, which will destabilize revenues, especially for smaller smartphone vendors like LG and Lenovo who play in European markets without a huge base in China to fall back on.

Even in China, things have stagnated. According to the China Academy of Information and Communications Technology (CAICT), a state-backed think tank, smartphone sales dropped 30.3% quarter-over-quarter (QoQ) and 5.8% year-over-year (YoY) for Q3 2020. The slump in Q3 sales is an effect of seasonality, as consumers typically wait out the fall period, expecting an iPhone launch cycle followed by holiday promotions. But month over month shipments are improving, which is good news for both mobile carriers and smartphone vendors. Apple’s iPhone 12 5G phones launched in October are expected to set off a 5G upgrade super cycle and both carriers and Apple are promoting the phones in China.

Apple posts record September product revenues – thanks to every product except iPhones

Apple recorded overall revenues of $274.5 billion in Q3 2020, growing 6% year-on-year. Apple’s product revenue was $50.1 billion in Q3 020, up 7.7% from $46.5 billion in Q2, a September quarter record, and showed a combined 30% growth in revenue across product categories outside of the iPhone. Apple’s iPhone revenues were $26.4 billion in Q3 2020, its lowest ever for a September period, which is the effect of seasonality.

Even for a company the size and scale of Apple and a steadied logistics, constraints still remain with supply chains, and it will be hard to predict how long constraints last. The preorders for the $1000 iPhone 12 Pro are running into weeks’ worth of delays because of supply issues around power chips and LiDAR components. Apple’s scale and its lean supply chain is allowing it to swiftly reallocate its resources from iPads to address supply issues, and restock older iPhones to cover a shortage of iPhone 12 Pro phones on retail shelves. Apple has not provided any guidance for the next two quarters due to the uncertainty surrounding the pandemic.

Huawei revenue is holding on – thanks to China

Huawei reported slowing revenue growth during the first three quarters of 2020, due to Covid-19 headwinds and the US ban. Its YoY revenue growth of 9.9% (with $101 billion in revenue) was considerably lower than a 24.4% growth the same time last year. But despite its challenges and a depleting stockpile of inventory for Europe, Huawei is holding strong due to its 5G phone shipments in China.

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Huawei remains in a precarious positon in Europe, a key market. The lack of Google’s services continue to hamper Huawei’s phone sales in Europe, and Huawei has no presence in the carrier channels in the US smartphone market. With Europe in the throes of a second lockdown, Huawei’s position there is unlikely to improve with Samsung and Xiaomi aggressively marketing their cheaper 5G phones and Apple swooping in with its 5G iPhone 12. The OEM has warned that its global supply chain is being put under intense pressure and its production and operations face significant challenges in the coming months.

Samsung sees a sharp rise in smartphone shipments

Samsung’s smartphone shipments jumped almost 50% in Q3 2020 over the previous quarter, including its new flagship products. Its mid-range and low-tier phones, the Galaxy A series and Galaxy M series, as well as its flagship productivity phones such as the Note 20 and the Z Fold 2 series drove shipments. The company’s operating profits grew almost 60%  YoY and 52% QoQ to $10.09 billion in Q3 2020, thanks to a boost in demand for smartphones and consumer electronics, as well as efficient cost management.

However, Samsung’s Q4 guidance has been cautious. Market demand is expected to be strong due to year-end seasonality. But carrier focus on Apple’s 5G iPhone 12 in the early half of Q4 will affect Samsung’s shipments, and holiday promotions sponsored by Samsung will affect profits in Q4.