Smartphone OEMs have largely bypassed the massive hit borne by the services industries due to Covid-19. According to a government based think tank China Academy of Information and Communications (CAICT), China’s 2020 smartphone sales declined more than 20% overall YoY, which is not surprising, considering China was the worst hit by the pandemic in much of 1H 2020.

China’s smartphone shipments for January 2021 surpassed not only 2020 numbers but also 2019, reaching 39.6 million units. China is a mature 5G market and Apple’s 5G iPhone 12, launched in October 2020, set off an upgrade super-cycle in the country. China has also put most of Covid-19 behind it; the country is hosting one of its first in-person tradeshows in a year, the Mobile World Congress (MWC) held in Shanghai, hinting that at least China is back to some sort of a normal.

Apple stuns with record revenues – the 5G iPhone 12 super-cycle to continue in 2021

The 5G iPhone 12 has been a huge success, not only in the US, but across the globe, responsible for Apple’s record quarterly revenues, breaking the $100 billion barrier for the company with overall revenues of $111.4 billion, a 21% increase YoY. The iPhone 12 was a huge success in China, responsible for 57% of overall growth in revenue YoY. However, supply chain issues continue to persist.

Shipments of the 12 Pro were delayed by weeks in China, and as usual, were out of stock at launch in US retail stores. But Apple’s guidance predicts a return to normal seasonal patterns in 2021.  As Europe and the US expand their 5G coverage in 2021, the iPhone 12 will be ready and waiting, likely with a new 5G iPhone 13 on its heels. Unless the world goes into yet another strict lockdown, the 5G iPhone supercycle is just beginning.

Huawei: China helps with 2020 revenues, but component ban continues to haunt

Huawei’s total revenue in 2020 is expected to come in at US$136.7 billion, an increase of 11.2%, and its profit at US$9.9 billion, an increase of 10.4% YoY. But industry reports indicate a decline in Q4 phone shipments, even in its home market of China.

The sale of its mid-range brand Honor, is one of the reasons for the reported dip in shipments, in addition to the ban by the US government on obtaining 5G components. If Huawei can manage to keep producing phones, it will survive in China, but not its non-China markets. Phones lacking Google’s services will be a hard sell in Android markets like Europe, and scaling its home-grown Harmony into a viable OS is taking time.

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However, Huawei is running out of its Kirin chipsets and rivals like Xiaomi are getting aggressive in the Chinese market. Apple’s iPhone 12 success in China makes it more difficult for Huawei on its home turf. Unless Huawei can conjure up a rabbit out of its hat, it will see gradual decline in smartphone shipments, even in China.

Samsung’s Q4 smartphone revenues impacted by Apple’s iPhone 12 success

Samsung’s overall revenues for 2020 came in at $211.5 billion, almost double that of Apple. Its operating profit of $32.1 billion in 2020 was up YoY by almost 30%. However, Samsung’s mobile revenues declined by 28% in Q4 to $19.32 billion. Apple’s 5G iPhone 12 has been a huge success across regions, directly affecting Samsung’s bottom line.

In a paradox, Samsung saw strong DRAM (dynamic- RAM) demand, thanks to the successful launch of the iPhone 12. Samsung attributes this strong demand for DRAM to smartphone shipments recovering in Q4 to pre-pandemic levels, which is a good indicator for 2021.

Samsung expects it mobile business to improve due to strong sales of flagship devices, including the Galaxy S21 and the launch of mass market 5G models, indicating that cheap phones continue to remain important to Samsung’s line-up and to the smartphone market.